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Have Oil Prices Bottomed?

Charles Delvalle — Fri, 03 Apr 2009 15:59:52 +0000

Oil is a hot topic. Even when I was five my mother always moaned about how much gas prices had gone up. Before I got my first car, I was already an expert at locating the cheapest gas stations. So I felt particularly betrayed that oil prices didn’t move down much further like I predicted they would here. But listen, I don’t like losing. So when I realized was wrong, I decided to look at a chart of the Light Crude Oil Contracts ($WTIC) and see what it told me.

A number of technically bullish things have happened over the past 30 days that has turned me into a fully fledged oil bull.

First of all, oil has been making higher highs and higher lows since bottoming in late December.

Second, oil has rallied above its 50 day moving average and since then that average has acted as support.

Third, just a few weeks ago the 20 day moving average crossed above the 50 day moving average. This is known as a bullish cross.

Lastly, the fact that both the RSI and Slow Stochastic have turned up after hitting 50 suggests the underlying trend is strengthening.

Listen if you’re buying for the long-term, this is a sweet spot to buy it at. If you’re a short-term technical trader, this is still a sweet spot to enter into.

If oil keeps rallying then I don’t expect any headwinds untill the $70 mark. By that time, the 200 day moving average should also be around there (marking a huge resistance point)

Oil’s Going Down… Here’s How to Play It

Charles Delvalle — Fri, 27 Feb 2009 17:54:19 +0000

When it comes to the oil markets, volatility is the name of the game. After seeing prices of nearly $150 a barrel last summer, oil prices have dropped to about $45 a barrel. Will prices move higher anytime soon?

Not likely.

As you can see, Light Crude Oil ($WTIC) has formed a nice little downwards channel trend that stretches back all the way back from its November highs.

Combined with a Slow Stochastic (bottom of the chart) and the Relative Strength Indicator (RSI) (top of the chart) that show oil as approaching overbought, the indication is that oil prices will move down.

This morning, oil prices reacted negatively against that trend channel and lost value.

This confirms that the bearish trend line should continue and that we should see lower oil prices in the weeks ahead.

A great way to play this situation is to short-sell the United States Oil Fund LP ETF (NYSE:USO).

A Little Perspective on the Oil Market

Brian Hunt — Sat, 21 Jun 2008 01:13:40 +0000

It’s hard to believe now, but crude oil was under $20 a barrel back in 2002. The U.S. economy was weak, and Chinese demand hadn’t entered overdrive yet.

Since then, the bull market in oil has behaved like every other one since the beginning of time: Run higher, then correct. Run higher, then correct. Occasionally, run way higher, then correct.

As you can see from today’s chart, oil ran all the way from $55 to $135 in the past 18 months – a 145% run for those of you scoring at home.

Moves like this almost always precede sharp corrections. The market doesn’t “like” to carry a lot of people onto easy money for long. You can see how a decline down to $105 would be totally reasonable in the context of the rally. Even a decline down to $70 would leave oil in the realm of its long-term trend.

So… for the oil investors out there: Expect a decline. A $40 haircut isn’t unreasonable in this wild market. But chances are, it would be a healthy correction in the midst of a long-term bull market.

Source: A Little Perspective on the Oil Market