Nymex Crude Oil (CL)
Crude oil’s recovery was limited at 72.90 last week and reversed to fall sharply on Friday. Break of 68.96 minor support indicates that such recovery is merely a correction to fall from 75.0 and should have completed. Initial bias is flipped back to the downside this week and further fall should be seen to 67.05 first. Break will confirm fall resumption to 100% projection of 75 to 67.05 from 72.9 at 64.95 next. On the upside, while some recovery might be seen, break of 72.90 is needed to indicate resumption of rise from 67.05 Otherwise, risk will remain mildly on the downside.
In the bigger picture, there is no change in the view that rise from 33.2 is a correction to whole down trend form 147.27. Question remains on whether such rally has completed at 75.0 already. Crude oil is now at important medium term trend line support. Sustained trading below will be the first alert that such rise has finished. Break of 58.32 will confirm this case and turn outlook bearish for 33.2 low next. On the upside, while another rise cannot be ruled out for the moment, strong resistance is expected as crude oil enters into 76.77/90.24 fibo resistance zone (38.2% and 50% retracement of 147.27 to 33.2) and bring reversal finally.
In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While there rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we’re still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.
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