MAY CRUDE OIL
Overnight’s slip below 30-Mar’s 19.27 low and our key risk parameter nullifies 02-Apr’s bullish divergence in momentum, chalks up the price action from 18-Mar’s 20.52 low to 03-Ar’s 29.13 high as a corrective/consolidative event and reinstates the secular bear trend. This resumed weakness obviously defines 03-Apr’s 29.13 high as our new key risk parameter the market now needs to recoup to confirm another bullish divergence in momentum of a sufficient scale to threaten the major bear trend once again. From a shorter-term perspective, we’re defining 07-Apr’s 23.54 (suspected minor 1st-wave) low as our new short-term risk parameter the market now needs to recover above to jeopardize the impulsive integrity of a more immediate bearish count. In lieu of strength above at least 23.54, further and possibly steep losses should not surprise.
While the secular bear trend has, in fact, resumed, we must also acknowledge the price action from mid-Mar’s 20.52 low to 03-Apr’s 29.13 high as a key (suspected 4th-Wave) component of the slowdown process that typically precedes virtually all major BASE/reversal environments. CLEARLY, the market has identified that 29.13 high as THE KEY level the bear now needs to sustain losses below to remain intact. It will be through this 29.13 gateway that we believe we’ll be able to successfully this market’s eventual major reversal higher. Until and unless the market recoups at least 23.54 however, the trend is down on all scales and should not surprise by its continuance.
The weekly log chart below shows historically bearish sentiment levels that we fully expect to eventually contribute to a major base/reversal environment and opportunity. But traders are reminded that sentiment/contrary opinion is not an applicable technical tool in the absence of an accompanying confirmed bullish divergence in momentum on even a short-term scale, let alone a more appropriate scale needed to, in fact, break the clear and present and major downtrend. As the market has confirmed neither, current historically bearish sentiment levels will not inhibit further and possibly steep losses.
These issues considered, a neutral-to-cautiously-bearish policy and exposure from 20.00 OB is advised with a recovery above 23.54 minimally required to threaten this bearish count and resurrect a broader base/reversal environment. In lieu of such strength, further and possibly steep losses are once again exposed.
MAY HEATING OIL
The technical construct and expectations for diesel are identical to those detailed above in crude oil with 1.0153 and 1.1104 considered our new short- and longer-term risk parameters from which a resumed but cautious bearish policy can be objectively based and managed. Former 0.9300-to-0.9500-area support would be expected to hold as new resistance ahead of further and possibly steep losses.