Charting Crude Oil Prices
Special Edition: The Smart Profits Report Oil Forum
The Smart Profits Report: Issue #310
Friday, May 19, 2006
Charting Crude Oil Prices: Oil’s Key "Milestone": $68 A Barrel
by D.R. Barton
Advisory Panelist, Mt. Vernon Research
Crude oil is one of the clearest indications of the limitations of fundamental analysis. Anyone who thinks that the supply or demand of crude oil in world has changed by 10% in the last couple of weeks has a screw loose. Yet, the price of crude oil on the open market has fluctuated by that amount. Why?
Don’t get me wrong. Fundamental factors are certainly influencing the price. Concerns over Iran’s nuclear ambitions, political strife in Nigeria, and fluctuating U.S. reserves have an effect, for sure.
That’s part of the cause. But the effect is how people react to the news, and what they think it means for the future, based on that news. This is where technical analysis comes into play… and I think this current chart of crude oil prices gives a hint about future direction.
As you can see, oil is showing signs of short- to intermediate-term topping. It has made a series of lower highs, and this weakness has been confirmed by the MACD (an indicator that measures price momentum).
The important milestone going forward is $68.
A drop under $68 could signal a further correction. However, if prices can hold at that level for a few weeks, then we should see higher prices in the months to come.
Long term, it’s hard not to be bullish on oil prices from both a fundamental and technical perspective. But for the near term, indications are for continued weakness or price consolidation.
Good Trading,
D.R. Barton
Expensive Crude Here For Good
by Jim Stanton
Advisory Panelist, Mt. Vernon Research
"It’s different this time." - There are so many times you hear that expression when referring to certain events in the financial markets.
However, 95% of the time, it turns out that it’s not different at all - no matter what the issue.
But I’ve got news for you: The activity in crude oil is different this time around, and higher oil prices are here to stay. Why? Because world demand has grown exponentially, thanks to China, India, and other emerging markets and rapidly-developing countries.
So, until more wells and refineries come online, or new technologies are developed, supply and demand will keep oil prices above $40.
Below is a July weekly chart of crude oil prices in futures. As you can see, the 50-week moving average, the recent uptrend line, and long-term regression line all converge in the $65 area. The July contract is currently selling above $68, and if the current price correction continues, I expect that a test of the $65 area would hold.
Looking further out, there is longer-term support around $44 (50-month moving average and 200-week moving average), and if the world economy slows dramatically, that level could be tested. But that’s not likely to happen any time soon.
Good Trading,
Jim Stanton
Related Articles:
How One Company's Groundbreaking "Cancer Blaster" Could Make You RichWhile the World Health Organization predicts 12 million people will develop cancer in 2009, this little-known company is fighting the surge with its amazing cancer-killing device... Although most people know nothing about it, this "Cancer Blaster" has already saved thousands of people around the world... Like Ohio resident, Caroline Brubaker, who says "with just three, pain-free outpatient visits, I had my life back" or Richard Swanson of Arizona who ended up cancer-free after just 4 hours of treatment... The best part is, the company recently discovered an extraordinary breakthrough that could go mainstream in a matter of days... Read the full details to find out how you can get in ahead of the event - and be on your way to booking truly incredible gains.
|
Hear It From Our Premium Members... |
