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Is a Bottom Forming in Crude Oil?


Crude oil's support is tenuous.

The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: Crude oil returned to recent lows Tuesday, and the visit should be brief as the interim bounce was already an unnecessary delay to extending the decline. If the decline isn't extending, if the interim bounce wasn't a detour, then a bottom must be forming.

Dollar Basket
A rally back up to 80.80 Tuesday moved further away from the 80.05-80.10 support test that would form a more durable bottom. A second consecutive higher close Wednesday would get a benefit of the doubt for reversing momentum up.

Dec Contract EC; (NYSEARCA:FXE)
Monday night's drop behaved like the downleg that was expected after first retesting recent highs. A second consecutive lower close Wednesday would suggest no more retest of the highs is needed.

Dec Contract GC; (NYSEARCA:GLD)
Tuesday's open gapped under 1269.00 as was likely after Monday's rally closed back under 1278.00. Despite extending down to 1251.00, the drop was recovered back up to 1275.00, still preventing buyers from gaining traction. Extending higher after the close to test 1285.00 must be unwound overnight to maintain the attraction to 1241.00-1245.50.

Dec Contract SI; (NYSEARCA:SLV)
Friday's distributive pattern was fulfilled by Monday night's plunge to fresh lows testing 20.50. The balance of the session recovered back to Friday's 21.22 close.

30-year Treasury
Dec Contract US; (NYSEARCA:TLT)
A little firming in celebration of Monday's holiday having ended was not maintained, and price remain depressed throughout Tuesday, ranging around 132-00. A breakout was narrowly avoided, but could still be triggered by initial weakness Wednesday.

Crude Oil
Oct Contract CL; (NYSEARCA:USO)
Recent lows were attacked Tuesday attacking 101.00. Having produced a bounce on its last test, there is no bearish reason to further delay extending down to the 99.10 target.

Natural Gas
Overnight strength back up to Monday's 3.85 high did not extend higher intraday Tuesday. A fresh high close Wednesday - preferably the product of an aggressive rally - is all but required to maintain the rally's momentum.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
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