Weekly Report(19-23 September 2011) : Crude Oil Futures November Settlement

For more than a month oil, has been trading within an upside biased range bound in a form very similar to a rising wedge formation. The formation suggests that a downside continuation for the major downside move -from 115.00 top- may materialize, alongside the latest triple top near 90.00 areas that was accompanied with momentum bearish divergence, illustrated on chart over the RSI and Stochastic indicators, which gives the downside continuation scenario more meaning. Thereby, we expect a downside move for the week, but a breach of the ascending support of the formation around 86.50 is required to confirm the move. A Breach of this level will open the door to a retest initially of 83.00 followed by 80.00 area.

The trading range for the week is among the major support at 80.00 and the major resistance at 90.00.

The short-term trend is to the downside with steady daily closing below 100.00 targeting 65.00.

Previous Report

RecommendationBased on the charts and explanations above we recommend selling oil with four-hour closing below 86.60 targeting 83.00 and 80.00. Stop loss with four-hour closing above 88.00 OR selling oil around 88.00 targeting 86.50 and 83.00, stop loss above 89.00