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.
crude_oil_240min_chart
crude_oil_daily_chart
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.

crude_oil_weekly_chart

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