Talking Points
- Sentiment touches negative extremes in Crude
- Commodity testing long-term confluence zone
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Crude has fallen more than 30% since peaking out out around the Pi cycle turn window this past June (Read HERE). With the exception of a couple of reprieves in July and September the decline has been pretty steady. With sentiment reaching levels of extreme pessimism over the past couple of days (DSI at 4% bulls on Thursday) the contrarian in us can’t help but wonder if the commodity is getting due for a decent counter–trend pop. Currently the market is testing the bottom end of a fairly important support zone as the area between 75.50 and 72.50 marks a convergence of the 50% retracement of the 2008-2011 advance, the 200% extension of the 1H14 range, the 161.8% projection of the late 2013 decline and a median line connecting the 2013 and 2014 highs. If Crude is to undergo some kind of counter-trend bounce to clear out some of these extremes in sentiment we would expect to see it materialize from somewhere around these levels. Failure to find support around this confluence will open the door to a slide into the mid-60’s.
To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.
USOil Daily Chart: November 14, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 76.55 (Gann), 81.00 (Fibonacci)
Support: 73.75 (Fibonacci), 72.50 (Median line)
Strategy: Buy Crude
Entry: Buy Crude if it can manage a daily close back above 76.55 within the next few days
Stop: 1-day close below 72.50
Target: 85.00
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.
