Oil Analysis July 2015 (D,W)
Created on Sunday, 28 June 2015 02:36
Written by Austin Galt
Oil has been trading as expected in recent times. Let’s see where things currently stand using the daily and weekly charts.
OIL DAILY CHART
We can see the false break low at $42.03 was followed by a swift move higher. This is evidenced by the Andrew’s Pitchfork I have drawn which shows price trading straight up from the lower channel to the top of the upper channel where resistance was encountered.
Price now seems to be finding support at the middle pitchfork channel line and I expect the next leg higher is about to get underway. I will be looking for the final rally high to be somewhere around the upper channel line again. Let’s see.
After this first move up, price corrected into low in May 2015 at $56.51 and is denoted by the horizontal line.
I have added Fibonacci retracement levels of the first move up and this shows the correction was only able to clip the 23.6% retracement level which keeps this current uptrend in a very strong position. While one last move down that challenges the 38.2% level at $54.73 is not out of the question I favour the correction low to be in place.
The PSAR indicator has a bullish bias with the dots below price. These dots currently stand just below $58 and will perhaps provide support to price on any challenge now.
The RSI is looking a bit wishy washy and in no man’s land. Not much to gain from that.
Let’s move on to the weekly chart.
OIL WEEKLY CHART
The recent price high was accompanied by a new RSI high which is bullish. I expect the final price high to be accompanied by one or more bearish divergences in this indicator.
The MACD indicator is bullish despite the averages coming back together. As often happens in this situation, price marks time waiting for these averages to come together before launching higher again.
The PSAR indicator is bullish with the dots below price. The dots currently stand at $56.82 and I expect this support to hold.
I have drawn two horizontal lines which denote previous swing lows at $74.95 and $77.28. As outlined in previous analysis, I am looking for the rally high to be around resistance from these levels.
I have added Fibonacci retracement levels of the move down from August 2013 high to the recent March 2015 low and these previous swing low levels are right around the 50% retracement level which stands at $77.13.
I have drawn a Fibonacci Fan and the 61.8% angle looks to intersect with the 50% retracement level in September 2015 so that certainly has some timing potential.
I have added a 100 period moving average, denoted by the red line, and price may well find resistance at this line.
Once the rally high is in place I favour a move back down to test the low before a big uptrend takes hold.