Still Awaiting a Bull Signal in Crude Oil

The Commodity Trader’s view - The persistent decline in Crude Oil last year found a s/term base in December. Since then the market has been in consolidation mode, requiring continued patience as we wait for the necessary bull signals. The first, minor one, has now appeared.

• WEEKLY CHART – CONTINUATION: The 2008 decline completely unravelled the major 2007-08 upleg. Failure of the 49.90 Jan-07 low was followed by support in Dec, with the market trying to base below that key 50.00 area. This represents key resistance on this chart, and a (weekly) close above this would be a bullish sign, completing a base –also see Daily chart. Currently the Dec low here stays intact here, unlike the front month chart.
• DAILY CHART – APR-09: In the Commodity Trading Guide we had said that the recent break/erosion of the 39.82 Dec low may not mean much. And now the first of our required bull signals has appeared – a close above the small falling resistance line. BUT, we still want to see a further recovery to close above the 50.00 level (see Weekly chart above too) AND, ultimately, a break/close above the 56.86 06-Jan high, for final bull confirmation. Traders will choose which signal to use for their bull trigger – our favoured initial trigger would be a Daily close above 50.00, probably awaiting a subsequent pullback before buying. That falling resistance/return line could then offer some useful support and/or a good risk level for stop purposes. A drop below the 37.12 19-Feb low would crush this fragile green shoot.

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