My First Attempt To Read Crude!!!!

I am making an attempt to study the chart of Crude! I feel Crude is one chart now days that spooks a lot of analysts and most of the time its just going in the opposite direction than anticipated. I too decided to give it a shot…well if you are going to learn Technical Analysis might as well also take a dig at the most difficult market to anticipate.

Let us first take a look at the weekly chart on your left. On the price we can see we had made a little hammer (also an inside bar) which is also a part of bearish Harami (though not a potent one). Then this week we have closed with a DOJI signifying some confusion. This confusion might be due to OPEC meet coming up and also the Saudi initiative to increase production, hinting that the present price of Crude is not rational (but then when are the markets ever rational!). With China also upping the price of petrol to curb its voracious appetite, might result in some lack of demand. Technically the prices are overstretched above their EMA’s and are likely to snap back as they have doe in the past.

On the daily chart we have very interesting or rather intriguing set up. The price is at the value area and suggests another move up as it has done in the past. This time the indicators below present a wee bit different picture. We have clear negative divergence on all the three indicators below; the RSI, the STOCHASTICS and the MACD. Surprisingly this time STOCHASTICS has stayed flat but under the 80 line (area marked by red circle). A failure to close above the May High next week will exhibit some weakness in crude. Whereas the short term trend line looks like a good support (it’s been providing support for last three months!) at 130, it is also a round number support. Below that the next support is 120.

With the given history of crude springing up surprises I shudder to suggest a short here but if one is long then its time to tighten the Stop Loss.