Thursday, November 28, 2013

WTIC Crude Oil Daily Chart Pending Death Cross Falling Wedge Positive Divergence

The fabled death cross (red circle) is about to occur for oil, probably tomorrow. A death cross is when the 50-day MA stabs down through the 200-day MA signaling bearish times ahead. A golden cross is when the 50-day MA pierces up through the 200-day MA signaling happy bullish times ahead. Seasoned technicians and chart readers pay little attention to these two patterns, they are more for the novice talking heads to tout to sell newspapers and television ad time. In fact, what typically happens is that the stock or index will tend to bounce when the death cross occurs, or, sell off when the golden cross occurs. However, over the intermediate term, a few months out, the crosses do tend to properly indicate the path forward.

And crude follows the typical scenario. The death cross did not technically occur as yet since the 50 is 4 pennies above the 200 still yet but it should cross tomorrow, Monday at the latest. The green lines show positive divergence wanting to see price move higher in this daily time frame. Bring up a weekly chart and note the 200-week MA at 91.95, a big-time over 2-year support line for oil. The anticipation is that price will bounce due to the possie d on the daily, and the 200-week MA will hold, in this near-term, but the recovery price move should only result in a sideways move through 92-96 for another month or so. Thus, if a nimble long trader you can try a quickie long trade, or, if you are losing confidence in oil and want to exit, you can exit on the bounce. The weekly chart indicators are open to lower prices. The current projection is that after the bounce and sideways behavior, into 2014, oil should come back down and collapse through the 200-week MA spoiling the 2-year plus positivity and confirming a global disinflationary and deflationary period ahead, exactly what the majority of traders do not even consider a remote possibility, and exactly what Chairman Bernanke is trying to avoid with 5 years of obscene money printing. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 11/30/13 at 8:05 AM:  The death cross occurs as expected during the Friday, 11/29 session. Oil pops off the positive divergence hitting 93.90 intrasession then closing at 92.78.

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