By: Mike_Paulenoff
Nearby NYMEX crude oil finally proved the chart work correct as it plunged from
the upper portion of its September congestion pattern (89.00-90.00) to the lower
portion (86.00-84.00). The decline from last Thursday's lower recovery high at
90.15 into this morning's low at 84.93 has the look and structure of a completed
downleg.
If accurate, this means that a period of upside backing and filling towards
its key near-term breakdown area (86.50-87.50) could be in store in the upcoming
hours. It is for this reason we exited our inverse (short) position in the
ProShares UltraShort DJ-UBS Crude Oil (NYSE: SCO).
Apart from this shorter-term trading strategy and outlook, my longer-term work on NYMEX crude argues strongly that a counter-trend recovery period from the August 8 low at 75.71 ended at the September 13 high at 90.52 and that a new downleg has commenced that should revisit and likely break the August low. ETF traders may want to keep an eye on the U.S. Oil Fund ETF (USO).
Apart from this shorter-term trading strategy and outlook, my longer-term work on NYMEX crude argues strongly that a counter-trend recovery period from the August 8 low at 75.71 ended at the September 13 high at 90.52 and that a new downleg has commenced that should revisit and likely break the August low. ETF traders may want to keep an eye on the U.S. Oil Fund ETF (USO).
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