(Click to enlarge)
With the crude oil chart indicating a range bound trade, this week we’ll take a look at both sides of the market since crude could remain in its range until at least December 4 when OPEC will give its next marching instructions to traders.
THE BULLISH SIDE OF THE CHART
The promising closing price reversal bottom by the December Crude Oil futures contract the week-ending October 30 was a positive signal for crude oil bulls, but the weak follow-through rally last week suggests that sellers are still in control. Even with the potentially bullish chart pattern, all the bullish traders could muster was a normal correction in a bear market.
Despite last week’s weakness and lower close, the “somewhat” bullish tone will remain intact unless the $42.58 reversal bottom is taken out. If it holds as support then this could encourage more buying because the chart pattern will take on a more bullish look because of the formation of a possible secondary higher bottom.
Let’s go back a couple of months and revisit the current price action. December Crude Oil posted a closing price reversal bottom the week-ending August 28 at $39.22. This led to a follow-through rally that initially took us to $50.89, but after a series of inside weeks, finally topped at $51.42 the week-ending October 9.
The so-called “first leg up” is important because it is the one in the chart…