Tuesday, July 6, 2010

Crude Oil : Officially ina Downtrend

  Lets   take  a  look  the   ETF  USO   for  a  closer   look  at the    crude  oil  prices  trend . Above   one   is  a  2 year  weekly   duration  chart of the   ETF   .  Officially it's  started a  downtrend  . Lets  analyze it

  •   Most  bearish  alignment of  Expenential  moving     avarages of   200day  >50 day >30 day > 20 day EMA .  This  is  the  first   sign of  downtrend .
  • We  see  this   Exponential   moving  average   downtrend  both daily and weekly charts   which  is a  bad sign.
  •     The   MACd  is   also  confirming the  downtrend    by   making   lower  highs  and   lower lows .  We see that the   +ve  MACd  histogram  is  continously  waning  and   -ve  histogram  length  and   duration are  rising.
  •   The  weekly  chart   has  formed  a  head  and  shoulders  technical  pattern  with  a break  and  close  below  $  32  confirming  more   down side  to come.
POINT  AND FIGURE ANALYSIS   :

  • The prices are trading  below the  Bearish  REsistance  line
  •   Prices   have  a  bearish  price  objective  of  19.
  •   Advanced   P & F  analysis  sows that  crude  is  on  a  Relative strength SELL which  means  it's  going to under perform the overall market.
  •   So , I  sincerely  suggest  that you  should  watch out  for  any   of your   investments  which are crude  dependent  like   OIL services,  OIL  equipment ,  coal,   steel   etc.  Does not mean we  have to dump all those today .Gradually  trim  all  those  positions   at favourable  times.
Good luck and  Happy Trading !!!

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