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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Shift In Production May Herald A Price Bottom

September Crude Oil

(Click Image To Enlarge)

Although September Crude Oil futures are set to finish the month sharply lower, the market is in a position to post a weekly closing price reversal bottom, which could fuel the start of a 2 to 3 week counter-trend rally and possibly more.

On Tuesday, July 28, crude oil reached a low at $46.68, but closed higher for the day. The subsequent reversal on the daily chart has put the market in a position to also form a potentially bullish closing price reversal bottom on the weekly chart. This will occur following a close over $48.14 on Friday.

A reversal bottom will not mean the trend is getting ready to change to up, but it could trigger the start of a 2 to 3 week rally. Beside the higher close, the market is also in a position to overcome a steep downtrending angle that has guided prices lower for seven weeks. This angle moving down $2.00 per week from the $62.51 main top, drops in at $46.51 this week. A sustained move above this angle will mean that momentum has shifted to the upside.

Crude oil is also in a position to overcome the previous bottom at $46.69. This level is important because overtaking this level could force short-sellers who sold a break down under this level to cover their positions. This will also signal a shift in momentum to the upside.

Based on the $62.51 to $46.68 range, the first upside target is a downtrending angle at $54.51. The primary upside target is its retracement zone at $54.60 to $56.46.

September Unleaded Gasoline

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September Unleaded Gasoline futures are also sporting signs of a potential reversal to the upside. This could trigger the start of a 2 to 3 week short-covering rally.

The main range is $1.5081 to $2.0866. Its retracement zone is $1.7974 to $1.7270. On Wednesday, July 29, the market tested the Fibonacci level at $1.7270. The inability to break through this level encouraged short sellers to take profits and the rally began.

A new short-term range could be forming between $2.0866 and $1.7270. If the follow-through buying is strong enough this week then look for the start of a possible retracement into $1.9068 to $1.9492 over the next 2 to 3 weeks.

Exxon Mobil (XOM)

(Click Image To Enlarge)

Exxon Mobil (XOM) is also in a position to post a dramatic weekly closing price reversal bottom. The rally from $78.97 produced an outside move on the weekly…




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