Saturday, November 28, 2009

While it dropped, oil managed support above $70 (so far)

Oil dropped but recovered by the end of the day Friday to remain above its 50-day moving average. The daily chart indicators went negative, but those on the monthly actually remain positive. There's support at and just above $70 from moving averages and from one of my trendlines on the monthly chart. It definitely needs to stay over price support at the prior $65 swing low. It will be interesting if it's able to recover above $70. While I haven't been bullish on oil since it hit the monthly Bollinger Band midline and stalled, I may have to respect the long side more if oil is able to remain over $70 (even if another round of weakness makes it edge close to that level).

I understand the Elliott Wave count is probably bullish long term, which is one reason I'm not feeling strongly bearish as some seem to be. But it helps to identify support levels. So unless it breaks $70 (and especially $65), I'll give the oil price the benefit of the doubt.

UPDATE 5:05 pm - I see Tony Caldaro's Objective Elliott Wave update today refers to oil getting ready to downtrend. So my feelings on oil may be in line with the EW count at least near-term! That implies that it will lose the moving average support. If it also loses $70, that may send it to test $65 (and we'll take another look at price targets by then.)

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