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Crude Oil's Return to Its Lows Proves the Bounce Was Temporary


The lows for crude oil may be fleeting as well.

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: Last week's immediate bounce in crude oil that retraced its plunge never invalidated the outstanding target. The bounce's near-complete retracement through Sunday night hasn't yet merited implementing lower targets. The pattern may yet form a durable bottom.

Dollar Basket
Friday afternoon's bounce didn't recover 79.55, but that didn't stop a rally Sunday night from testing 79.80 resistance. Without extending higher intraday, a break back under 79.55 would still be capable of resuming the downleg targeting 79.00.

Dec Contract EC; (NYSEARCA:FXE)
Friday's close back at 1.3020 prevented the session from closing positive. The consequence was bearish, gapping down to test 1.2945-1.2980. But lower prior highs held as support and the session never extended down, so there remains potential for retesting last week's 1.3080 high up to 1.3100.

Dec Contract GC; (NYSEARCA:GLD)
Friday's drop extended down Monday, but held 1770.00 to avoid signaling momentum reversing down, and to maintain one last bit of potential for resuming the rally to 1814.00.

Dec Contract SI; (NYSEARCA:SLV)
Monday's second consecutive lower close following Friday's dip signals that momentum has reversed down. The session only firmed from the open's gap down, casting suspicion on the break's momentum. But it wasn't recovered, so anything short of gapping back up above 34.50-35.00 is vulnerable to testing 33.00.

30-year Treasury
Dec Contract US; (NYSEARCA:TLT)
Friday's slide on the employment report didn't preclude the potential for correcting before the drop continues. Monday's bounce to just above 148-00 has yet even to attack its potential to 148-26.

Crude Oil
Nov Contract CL; (NYSEARCA:USO)
Sunday night's slide confirmed Friday's retracement of most of Thursday's surge. In other words, strong hands produced Wednesday's plunge, and Thursday's surge was a corrective bounce. The overnight low at 88.21 stopped just short of filling the gap back to Wednesday's close, optimism that will only delay the inevitable fresh low that fulfills the 87.00 target. I'm not yet ready to establish a lower target, as the pattern does allow for a durable bottom to form from fresh lows.

Natural Gas
Monday's session ranged flat to higher, stopping short of touching 3.45 to signal momentum reversing up, or probing fresh lows to form a durable bottom.

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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