Oil Technical Analysis October 19, 2011

Light Sweet Crude

The CL contract had a very bullish day on large volume on Tuesday. The market is still under the $90 level, and the level seems to be still pushing prices down. Although the move is significant in its strength and volume, $90 simply has to be broken on a daily close in order to get bullish at this point in time. Until proven otherwise, the $90 level – which is just above, should still be thought of as the top of the range. Because of this, we would sell signs of weakness if they appear.

Brent

Brent markets actually fell for a while during the Tuesday session, only to pop back up later in the session. The resulting candle was a hammer, and it appears to be a bullish sign at this point. However, with the recent run up being so parabolic, it is hard to buy at this level – especially since the $115 level is above, and has been so resistive. The breaking of the lows from Tuesday would be a massively bearish signal, and we would be more comfortable selling on that event.