On September 25 I wrote, “Crude seems to have formed an inverted head-and-shoulders pattern off the 102.30 lows, with a neck line that crosses at about 103.90. An upside break through 103.90 to 104 opens the door to ADR bull targets at 104.57 and 105.06. While support from 102 to 102.30 seems firm, a break back below 103 suggests a likely move to key ADR bear targets at 102.40 and 101.91.”
Crude Oil failed at another round number today, leading to major selling pressure throughout most of the session. The 103.10 level held as early support at 3am CT this morning, which led to a rally up to 103.96. However, for the third time in about 4 or 5 sessions, Crude rallied up to a major round number level from below, which was 104 this time around, and failed hard. The sell-off eventually took price down to our 102.22 program level, where it held into the close.
This was a case where an inverted head-and-shoulders pattern developed, but failed to take out the 104 neck line, which led to major selling. As I told my traders today, it doesn’t matter that the pattern failed, because you can make money either way. As a matter of fact, my research has told me that failed patterns typically lead to bigger moves because the failure incites more participation. The rejection of the neck line at 104 spoke volumes, and a decline of 1.75 points into the close was the payoff.
The fact that price has taken the stairs on the way down, banging its head off each round number along the way, is bearish. But we are now at a critical juncture in the chart — 102 support. This is a make or break level, as the resulting move could push price $3 either way.
I seem to think price will test levels below 102, maybe pop some stops as far down as the major LVN at 100.35, and then rally back to 105 by week’s end. Part of this reasoning includes the fact that Crude hasn’t been down 3 consecutive weeks in a row since April of this year, and before that the last 3 down weeks in a row was las October 2012.
We are currently down on the week, but an end-of-week rally back to 105 would close this thing bullish on the week. Either way, Crude tends to rally after a down week, and especially after consecutive down weeks. So next week could be quite bullish depending on how this 102 level turns out.
| PivotBoss Levels & Targets: Crude Oil (CLX3) | |||||
| Thu, Sep 26, 2013 | |||||
| KEY LEVELS | ADR TARGETS | ||||
| 110.70 | LVN | ADR (10) | ONH | ONL | Range |
| 109.65 | PGM LVL | 2.01 | 102.39 | 102.27 | 0.12 |
| 108.15 | PGM LVL | AWR (10) | WH | WL | Range |
| 107.81 | CVPOC | 5.03 | 105.12 | 102.30 | 2.82 |
| 107.20 | Key LVL | ||||
| 106.00 | PGM LVL | DAILY TARGETS | WEEKLY TARGETS | ||
| 105.00 | PGM LVL | BULL | BULL | ||
| 104.90 | PGM LVL | 104.78 | 125% | 107.33 | 100% |
| 104.00 | PGM LVL | 104.28 | 100% | 106.07 | 75% |
| 103.76 | PD High | 103.78 | 75% | ||
| 103.45 | VPOC | 103.28 | 50% | ||
| 103.08 | Dual MP | ||||
| 103.00 | PGM LVL | BEAR | BEAR | ||
| 102.64 | SETTLE | 101.39 | 50% | 101.35 | 75% |
| 102.40 | PD Low | 100.88 | 75% | 100.09 | 100% |
| 102.22 | PGM LVL | 100.38 | 100% | ||
| 102.00 | LVN | 99.88 | 125% | ||
| 100.35 | LVN | ||||