TECHNICAL UPDATE: U.S. Oil (WTI) – More downside ahead? Updated Sep 21, 2012

TECHNICAL UPDATE: U.S. Oil (WTI) – More downside ahead?

Updated Sep 21, 2012 5:30:00 PM By Chris Tevere, CMT

---

---

Global central bank easing (namely the Fed, ECB & BOJ) in conjunction with geopolitical concerns in the Middle East saw crude oil rally over the past few months. That being said, we believe this has now been fully priced into the market and with the prospective release of the Strategic Petroleum Reserve (SPR) still as a potential overhang it could have a further downward impact on prices. Moreover, our overriding outlook continues to foresee further global growth concerns which would have a negative impact on demand. With the hurricane season in the U.S nearing an end over the coming weeks, and the aforementioned reasons to be bullish crude already having come and gone, we believe that crude oil is likely to experience further weakness in the weeks/months and possibly even quarters ahead.
Key Technical Bullets:

• Elliot Wave analysis suggests it just completed wave-4 up – Invalidation Level $100.75
• Failed into the 78.6% retracement around $100.25
• Saw a daily RSI Bearish Divergence into the Sept. 14^th high
• This was coincided by a Bearish Engulfing candlestick
• After breaking lower, now it sees resistance into the daily 144 & 169 EMA’s between $93.75/95
• Prior lows ($94.00/20) may also provide resistance
• Presently, it there is support into the $87-92 area, which sees the daily Ichimoku Cloud
• Daily RSI’s temporary break below the key 40 level suggests the prior uptrend may no longer be intact
• According to EW, as long as $100.75 holds then wave-5 down should see it test the June lows ($77.35/40)

WTI is a product not offered to US clients.

Chart Source: Forex Charts by eSignal