Advertisement
Advertisement

The Best Trading Opportunity Today – January Crude Oil – November 23, 2015

By:
James Hyerczyk
Updated: Nov 23, 2015, 13:13 UTC

January Crude Oil futures rebounded after early session weakness, putting the market in a position to breakout to the upside over a steep, long-term

Daily January Crude Oil

January Crude Oil futures rebounded after early session weakness, putting the market in a position to breakout to the upside over a steep, long-term downtrending angle that has been controlling the direction of the market for 14 days or since November 3.

Earlier in the session, the market tumbled on supply concerns, but then turned sharply higher after the Saudi Cabinet stressed its role in keeping the oil market stable. According to a report from the Saudi Press Palace in Riyadh, during a Cabinet session at Al-Yamamah Palace in Riyadh, the Cabinet stressed the country’s role in the stability of the oil market, and its continuing pursuit to cooperate with all oil producing and exporting countries.

Daily January Crude Oil
Daily January Crude Oil

Technically, the main trend is down according to the daily swing chart. However, due to the recent prolonged weakness, the market started today’s session in the window of time for a potentially bullish closing price reversal bottom. This chart pattern will not mean the trend is getting ready to turn up, but it could signal the start of a 2 to 3 day short-covering rally equal to at least 50% of the recent break from $49.23 to $40.41.

Buyers came in earlier at $40.41. This was slightly above the August 24 main bottom at $39.97. The support could have been formed by aggressive counter-trend buying, but it was more likely fueled by aggressive short-covering in reaction to the news.

The market is currently in a position to take out the steep downtrending angle at $42.23. Taking out this angle with conviction could trigger the start of a huge short-covering rally.

The current range is $49.23 to $40.41. This makes its retracement zone at $44.82 to $45.86 the primary upside target.

The current price at $42.19 means that traders have to watch the price action and read the order flow at Friday’s close at $41.90 and the downtrending angle at $42.23 the rest of the session. A sustained move over $41.90 will indicate the presence of buyers. A close over this level will form the closing price reversal bottom. A sustained move over $42.23 will indicate that short-sellers are exiting. The size of today’s rally will be determined by how aggressively these investors decide to cover their positions.

Keep in mind that volume may be below average because this is a holiday week. This makes the market susceptible to volatile price spikes because many of the major players may be on the sidelines. The odds of a breakout rally increase if weaker shorts are in the market rather today than the major commodity funds.

Watch the price action and read the order flow at $42.23 today. Trader reaction to this angle will tell us whether the bulls or the bears are in control. 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement