Thursday, October 15, 2015
Crude Oil Still 'Drippy' Following Shooting Star Doji
Candlestick Technical Analysis: Crude Oil
CL1: Crude oil continues to trade weak following a bearish ‘three rivers’ pattern on October 8th, 9th and 12th. The October 9th high nearly reached the 200 day moving average and failed, leaving a session we call a bearish ‘shooting star doji’. These patterns are given greater emphasis because the late-August, three session advance (‘bullish three white soldiers’) completed its march within $0.5 of the Oct 9th settle.
Some indecision in yesterday’s trade prompted recovery price action late in the session and left CLX5 only $0.02 lower on the day. Today marks a 4th new session low. Support remains below at the 50 day moving average ($44.75) and the Sep 9th closing level of $44.15. Resistance remains at the ‘mid’ from Oct 10th ($48.31).
I remain constructive on crude in the intermediate-term, but believe a new low will be reached over the coming sessions. I expect the Sep 9th support level to hold on settlement and a good test of this level may offer a good entry point for new longs. A settle below this $44.15 level would argue greater caution for bulls and suggest further backing and filling toward $41 is possible.
Otherwise, a bullish reverse with a settle above a trend line I draw that intersects trade today at $48.10 and falls at a rate of $0.72 per day would suggest a changed momentum and greater bullish prospects.