TECHNICAL UPDATE: US Oil (WTI) – Another failure above $93…Is sub-90 next? Updated Oct 19, 2012

TECHNICAL UPDATE: US Oil (WTI) – Another failure above $93…Is sub-90 next?

Updated  Oct 19, 2012 5:45:00 PM Written by Chris Tevere, CMT

---

---

While geopolitical concerns in the Middle East have increased of late, namely the tensions between Turkey and Syria, which could potentially lead to supply disruptions – We ultimately believe cooler heads will prevail. Furthermore, our global growth concerns are finally beginning to filter through to the market and slowing growth should continue to undermine demand. On the supply side, production in North America looks set to pick up over the next few months. When combined (slowing demand & increased supply), it should have a downward impact on price through the end of the year and beginning of Q1 2013.
A few weeks ago I highlighted the technical under-performance of US Oil – See TECHNICAL UPDATE:

• Elliot Wave analysis suggests it just completed wave-4 up – Invalidation Level $100.75
• Failed into the 78.6% retracement around $100.30
• Saw a daily RSI Bearish Divergence into the Sept. 14^th high
• This was coincided by a Bearish Engulfing candlestick

So what has crude done since then? Not much, but today’s price action suggests a break lower may be imminent:

• Failed numerous times into the daily 144 & 169 EMA’s between $93.15/75
• Broke below the daily Ichimoku Cloud around $92.00
• Closed below the 13-day sma for the first time since 10/9
• Daily RSI remains well below the key 60/65 level – Suggestive of an overall downtrend
• Today’s daily move formed a Bearish Engulfing candlestick

Should it break below the 100-day sma around $90.05 next week, then a test of the October low near $87.75 is likely to follow shortly thereafter. As a reminder, as long as $100.75 remains intact then Elliot Wave analysis proposes this is wave-5 down (suggests a test the June lows near $77.35)
WTI is a product not offered to US clients.

Chart Source: Forex Charts by eSignal