Oil Technical Analysis October 26, 2011

Light Sweet Crude

The CL contract rose during the session as it has broken above the all-important $90 mark recently. However, the daily candle is forming a shooting star, which shows that we could possibly be seeing a “false breakout”. The breaking of the bottom of the Tuesday session would be a sell signal, and a breaking of the top of the Tuesday session is a buy signal. Because of this, the CL contract now becomes a very binary trade.

Brent

The Brent markets actually fell a bit during the Tuesday session, but did manage a bounce during the latter hours of the session. The $110 area acted as support, and with the CL breaking out, it is very conceivable that the Brent markets could follow. In the meantime, we want to see $115 overtaken in order to buy this contract. Selling isn’t advised until we can get below $105 or so.