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April 11, 2009 We all look at the price of gasoline each time we fill up at the pumps. The underlying factor for rising prices is Crude Oil. Speculation has it that Crude Oil will go back up to the levels of last summer and possibly higher. However, I do believe that the Oil companies and producing countries know this will be suicide to their industry. This will usher in a "NEW AGE" of technology which will make Crude Oil obsolete in the transportation business. Thus driving the price down to the $10 a barrel level. The charts I have put together show that Crude Oil is in a trading range and will most likely be in this range for some time to come. The daily chart shows this trading range and also shows two distinct moving averages. The Red is a 55 period and Blue 135 period moving average. My Gecko software Track 'n Trade 5.0, allows me to enter any time period for these moving averages. Notice price has moved above the 55 period moving
average. This puts price in a position to move up to the 135 period moving
average which is near the top of the trading channel. It has been my
experience that when price breaks away from the 135 period moving average
and has not touched it for a long period of time, (in this case September
'08) the first time it touches it following this absence, price will find
resistance. A sell off should follow. Price could go a bit higher than the
moving average because of momentum, however a sell off should occur. As always in any market, the trader must prepare for anything to go wrong. If price moves higher and continues up, where does one put a stop? This all depends on where you entered the short position. The Lavender horizontal line I have drawn on the second chart is at the 59.90 level. one tic above an old swing high put in on Nov 28, '08. This stop should be a close only stop. If the position is stopped out, then look for prices to quickly move up to the $65 to $66 dollar range. To sum up this brief article, we have a clearly defined
range in Crude Oil futures and should now consider this in trading this
market. Watch your RSI and other indicators for overbought and oversold
market conditions and trade accordingly. Good Trading to you This article is not a recommendation to trade this market. It is only my opinion as to what I think Crude Oil is going to do. If you trade, then you are clearly acting on your own.
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