Weekly Report (May 09-13, 2011)

We have a number of technical factors on the chart above, first is the completion of the fifth wave of the IM and the beginning of the downside correction and second is the time crude has been trading outside the ascending channel that organized the previous four waves. Accordingly, we believe that crude is moving to test the support for the main ascending channel, and might breach it, as moving above the resistance for the ascending channel is usually followed by the breach for the main support and trading for a while below it. The Bollinger Bank expansion from below supports those expectations, yet crude needs to unload momentum indicators from the selling pressures. Therefore, we expect crude to move to the downside this week after the upside correction.

The trading range for this week is among the major support at 91.00 and the major resistance at 107.30.

The short term trend is to the upside with steady daily closing above 100.40 targeting 116.75.

Support97.2596.3095.7094.8094.15
Resistance100.40101.20101.80102.75103.60
RecommendationBased on the charts and explanations above our opinion is selling crude around 102.75 and take profit in stages at 96.60, and 93.15 and stop loss with daily closing above 105.70 might be appropriate this week