Energy Complex Teetering Near Range caps

April 2, 2018 10:01AM CDT

MAY CRUDE OIL: In last Mon's Technical Blog we discussed waning upside momentum from the extreme upper recesses of the past couple months' range that posed a threat to Feb-Mar's recovery attempt. Since then, Wed's slip below our short-term risk parameter at 64.11 CONFIRMS a bearish divergence in short-term mo that defines last Mon's 66.55 high as possibly the END of the rally from at least 08-Mar's 59.95 low. And given the prospect that the recovery from 14-Feb's 58.20 low is a 3-wave affair as labeled in the 240-min chart below, we believe the odds have increased for another intra-2-month-range relapse that could be relative steep and emotion. In this regard last week's 66.55 high complements 25-Jan's 66.66 high as an area of key resistance and a reliable one from which non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed.
The daily (above) and weekly log (below) charts show the pertinence of 25-Jan's 66.66 high and resistance. Amidst still-historically-frothy 95%-area levels in our RJO Bullish Sentiment Index we believe current levels present a slippery slope for bulls and a condition from which this market is vulnerable to another intra-range relapse, possibly as steep as late-Jan/early-Feb's initial counter-trend break to 58.07.
These issues considered, traders are advised to move to a neutral-to-cautiously-bearish position from current 64.30-area prices OB with a recovery above at least 66.55 and preferably 66.66 required to negate this call and re-expose the major uptrend. In lieu of such strength further and possibly surprising losses to the lower-quarter of the 2-month range should not surprise.


RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.