After breaking out of the range mentioned yesterday at the $99.50 level the predicted large continuation occurred. This resulted in a huge $10 plus move from the highs (the second largest in history). The downside technical target is the bottom of the ‘flagpole’ which I have been studying around $88.90. A technical tool often used is to bisect a large daily range and use this point as a ‘pivotal number’, which gives us the basis of yesterday’s activity at $97.86 on the chart. These ‘pivotal numbers’ often turn out to be magnets for future ranges.The short and medium term trends are down while the long term trend is bullish.
- Support: $92.64 (yesterdays low) Resistance: $103.08 (yesterdays high)
- Support: $92.20 (low of 15/09/08) Resistance: $99.50 (low of 22/09/08)
- Support: $88.90 (low of 16/09/08) Resistance: $94.85 (low of 19/09/08)
Summary:
Once again oil fell victim to the US equity markets, collapsing on the failure of the US government to ratify the proposed $700 billion ‘bail out’ proposals. In addition to this, US dollar strength also weighed extremely heavily on the price. Most analysts are expecting the economic slowdown and demand woes to push oil considerably lower, but it is worth considering where these excess funds will be allocated. Banks are offering attractive deposit rates (if they are still solvent enough to honour them) which are likely to attract some capital, but my feeling is that investors are likely to look further afield for alternatives and oil may well be a strong candidate. If you are thinking of trading in oil please just drop me a line as I am developing a new site with several interesting opportunities.
President Bush is speaking at 08:45 ( New York time) and we anticipate any resultant moves in the stock market as a result to be mirrored by oil.
