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Will Crude Oil's Plunge Wednesday Turn Bullish?


Gapping down to prior lows might have trapped shorts.

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's break lower Wednesday held a retest of its prior low, but that won't be bullish if it were to extend down without delay. Its immediate rejection would suggest a much bigger bottom had formed than was being considered.

Dollar Basket
Follow-through by the current Symmetrical Triangle pattern extended down to nearly test the 80.45 support before reversing up sharply to test 80.80 resistance. Back above 80.85 would signal the drop had ended, and that momentum was reversing up to launch a new rally leg.

Dec Contract EC; (NYSEARCA:FXE)
Tuesday's false breakout above the recently formed Ascending Triangle gapped up through 1.3580 but stopped short of touching 1.3635 before reversing back down under 1.3580. Closing back under 1.3520 would signal a new downleg underway.

Dec Contract GC; (NYSEARCA:GLD)
Attacking the recent 1258.00 highs overnight was already reversing down into Wednesday's open, which extended down intraday into negative territory to probe 1240.00-1245.50 as support went down to 1237.00. Two consecutive closes beyond the range are required to indicate trending. Managing to fill the gap back to 1228.10 without closing under 1230.50 before confirming a breakout would help to form a bottom.

Dec Contract SI; (NYSEARCA:SLV)
Overnight strength wasn't very strong, and it reversed Wednesday to retest Monday's 19.65 gap down. There is no unfinished business below, but bottoming depends more on avoiding two consecutive lower closes.

30-year Treasury
Dec Contract US; (NYSEARCA:TLT)
[Rolling coverage forward to Mar] Tuesday's test of 132-30 (132-14 basis Dec) reacted down temporarily Wednesday under 132-22 (132-06 basis Dec) to signal momentum reversing down. The drop extended down to 132-06 but recovered 132-12 (131-28 basis Dec), whose break through the close would still target at least 131-16 (131-00 basis Dec).

Crude Oil
Oct Contract CL; (NYSEARCA:USO)
Having failed Tuesday to trigger the buy signal above 94.60, the pattern was vulnerable to Wednesday's gap down extending to fresh lows intraday at 92.21, which is under the prior downleg's 93.25 target. The session did only range around the prior downleg's 92.87 low, potentially forming an island, which would be bullish if rejected by gapping up back above 93.70.

Natural Gas
The 3.88 resistance and its overnight tests were probed by fresh recovery highs Wednesday up to 3.91, but still being tested into the afternoon. A second consecutive higher close would confirm the rally's momentum remains intact for its next higher objective at 4.25. Otherwise, closing under 3.82 would now signal the current upleg was at least being corrected.

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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No positions in stocks mentioned.
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