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Crude Oil at Important Support

from ChartWorks:: published by Institutional Advisors

Bob Hoye
Technical observations of RossClark@shaw.ca
September 23rd, 2006

The decline in crude oil since July ($79.86 to $59.80) is into the projected support area of the 50-week Keltner band at around $59. It also compares well with other corrections of the past two decades.

The weekly RSI(14) is now down to 35. Optimum lows have generated RSI reading in the mid 30’s on the test of the Keltner band. The initial declines from the highs once the 50-week moving average was violated were as follows:

Interim Bottom at Keltner Band

The decline is now 10 weeks old. Since 1990 the initial declines to the Keltner band have been of similar duration (9, 13, 9, 10, 9, 12, 14 & 11 weeks).

Typically, the corrective rally retraces 40% to 60% of the decline. It can take upwards of seven to twenty-six weeks to make the complete rally. During the interim period it is common to make a retest of the support (i.e. a double bottom), generally taking it out by 3%. Such a re-test would be within the normal parameters of a seasonal low, anticipated to occur during December-January.

 

Bob Hoye
September 23rd, 2006

EMAIL:: bobhoye@institutionaladvisors.com
CHARTWORKS WEBSITE:: www.institutionaladvisors.com

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