Crude Oil Tests Resistance

Last Friday I posted on StockTwits a chart of a potential false break in crude oil ($CL_F) and that it might be hinting at higher oil prices. We then saw price begin to consolidate for  a few days before pushing higher by nearly 2% yesterday. This bullish move on Wednesday has sent oil to test previous support which has now become resistance.

I last mentioned this level back in December when we were seeing a small positive divergence in momentum which ultimately propelled $CL_F to test $100/barrel. However, crude was unable to maintain its strength and quickly fell back down to the low $90′s. Once again there is a slight positive divergence taking place in the Relative Strength Index (top panel of the chart) as it makes a higher low off an ‘oversold’ level while price tested the November low. At the time of this writing, crude prices are in the red for today and may take time to work through the supply brought about from this multi-year trend line.

I’ll be watching to see if price once again drops back to the January low or if the commodity can break the trend line as well as the 50-day moving average and fight its way back to $100. We’ll see what happens.

WTIC

Don’t forget to vote for my blog for the TraderPlanet Star Award - Click here to vote!

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Crude Oil and Gold Relationship Hits Support

There’s an interesting relationship between crude oil ($CL_F) and gold ($GC_F) that I like to keep an eye on. When the green line on the chart below is rising we know that crude oil is outperforming (rising more or falling less) than gold. This was the case for much of 2013 as gold dropped for nearly the entire year while oil rose from January until September and then weakened into December.

The ratio between crude and gold is now testing support on the trend line from the March and November lows. If things improve in the relative performance of oil against gold then we should see the Relative Strength Index hold above 35/30 and see the green line bounce off support. I’ll be watching this relationship this week and see if the trend line is able to hold.

WTIC GOLD

Don’t forget to vote daily for my blog for the TraderPlanet Star Award – Click here to vote!

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

What I See In Crude Oil

I’ve been watching crude oil ($CL_F) closely over the last month. In mid-November I highlighted the short-term channel that crude was in and the bias appeared to be for a break to the upside based on the positive divergences in momentum and volume. The price of a barrel of crude oil was also resting on the trend line support off the June ’12 and April ’13 lows. We saw a false break to the downside of the channel but support was still in tact. This is why patience and not having blinders on can be important in trading!

With the recent strong move in crude I thought it would be good to revisit the chart. As you can see below, we still have the positive move in the Relative Strength Index as well as a break of the short-term 20-day moving average. Two days ago I tweeted that we had an island candle pattern, which is typically bullish when occurring in an established down trend, taking place in oil as well as a strong confirmation.

Right now we are approaching the 50- and 200-day moving averages which could introduce a supply of selling that buyers will need to work through to see higher prices. The low-level of bullish sentiment I showed in a chart in November has improved but we still aren’t seeing a rush of bullishness into the oil market, which could mean there is still some room to run.

Crude Oil

Things look constructive and if we are able to clear the two moving averages then a new up trend could be established. I’ll be watching to see where price takes us.

Don’t forget to vote for my blog for the TraderPlanet Star Award - Click here to vote!

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.