"Up from the ground come's a bubblin' crude."
Maybe we should change Jed's theme song to "Up from the down come's a bubblin' crude oil price".
OK...no songwriting skills present. Let's do some chart analysis on crude. I have a few different ideas here.
First, let's look at a chart of crude with a few indicators on it that I don't usually use.
First of all, the RSI has slammed into overbought above 70. Oil seems particularly sensitive to this level as the orange caution arrows indicate.
If I take the volume by price overlay, you can see that the peak level is right around $100. What this means is everybody at that price and above are underwater or have lost money on crude oil. If we remember how Oil PLUMMETED from the $105-$106, all those corporations and investments were trapped as the price plummeted $10 in 2 days. So this Volume by Price chart shows a significant level of supply at this level. You can also see the bar around $97.50 is the second largest, so we are stepping into supply now.
If you put fib lines on the chart, You'll see the 61.8% retracement based on closing prices is at $97.43. If you use intraday, the level is $97.70. I have written numerous times on how well the fibonacci levels affect $WTIC, so it is clearly an important level.
The obvious thing to notice is the 200 DMA is right at this level as well. Lastly, the 200 DMA has been flat for the past year!!!!!!!
Ok, Look at the gray support and resistance area. The upper and lower boundaries have some hits just above and just below. Here we sit near the centre.
The MACD still has a positive slope and nothing slowing it down. So that is Bullish!
Look at the trendlines on the chart below.
What do you think of these trendlines?
What I notice is the ceiling on the downtrend is just under $100, and the uptrend line is really too vertical, so a move to a more gentle slope of 45 Degrees is probably due.
Look at the price action after volume deceleration...Usually negative.
Lastly, check the ATR. If the volatility picks up and breaks the downtrend, It's probably a get protected signal.
Will this roll over and crash? Don't know, don't think so but I do expect some serious friction to show up at this level. I am not thrilled that Suncor has moved sideways for 5 weeks.
I could throw up many charts from individual oil companies and drillers Etc. to extend the analysis, but I'll leave this analysis here and you can check that detail out.
Good Trading,
Greg Schnell, CMT
