Charting Crude Oil into Daily Resistance

What’s going on with Crude Oil at the moment?

Let’s take a look at the Daily Resistance Level along with a “step-inside” perspective from the intraday chart.

Let’s start with the prevailing Daily Chart trend – it’s a downtrend as evidenced by the progressive series of lower price lows and lower price highs, which is confirmed by the EMA Orientation (the 20 EMA consistently resides under the 50 EMA).

#-ad_banner-#A down-trend is in force until clear signals prove a reversals – none of those exist at the moment.

That takes us to our present price swing into the falling 50 day EMA, which has turned back price three prior times since price reversed lower in May 2011.  Logic would suggest that the 50 EMA would again turn-back price a fourth time.

Also, I drew in little “bear flag” patterns which also have repeated three times in the past… although the current rally does NOT take the form of a bear flag – it’s still a move into the EMA resistance near $86.

It’s also worth noting that a Positive Momentum Divergence has formed into the late September low under $77.50… but you can also see how a similar positive divergence formed at the end of June, and the outcome through July.

So, the main idea is that the $86 level is a key resistance area that is a “Make or Break” between buyers and sellers.

Let’s now step inside the 15-min intraday chart to see if we can get a clearer picture:

Looking at the @CL Futures, we see the ‘inner-workings’ of the recent rally into the $86 daily chart target level.

As price entered (tested) the $86 price target, a clear Negative Momentum Divergence undercut the rally into $86 – that’s not something you want to see if you expect price to continue its rally.

In addition, this morning’s breakdown of the 15-min EMA and trendline structure – roughly at $85 – is a sell signal, and as of this writing, price appears to be confirming this sell/hedge/protect signal.

For an educational reference, you can see what happened in early October with regard to the $77 Daily Chart support level that was met with an intraday Positive Momentum Divergence as labeled.

The recent up-swing also began with an opening impulse gap.

Anyway, this is a good example of how it is beneficial to combine two timeframes to get a better picture of the likely/probable – though never guaranteed – next immediate swing in price.