Crude Light 240 Min Chart

In Mon’s Technical Blog we discussed some weakening/vulnerable price action on a very short-term basis that provided a very early warning that Mon’s 55.75 high could be the end of an impressive 6-week recovery from 24-Dec’s 42.36 low.  And while a failure below 28-Jan’s 51.33 corrective low and short-term risk parameter remains required to confirm the bearish divergence in DAILY momentum (below) needed to, in fact, break this 6-week uptrend, today’s resumed slippage below Mon’s 53.29 initial counter-trend low provides the next bit of reinforcing evidence of a peak/correction count.

Crude Light Daily Chart


Crude Light Weekly Chart

On a much broader scale we remain of the opinion that the extent and impulsiveness of Dec-Jan’s rally defines 24-Dec’s 42.36 low as the end of the meltdown from 03-Oct’s 76.90 high and start of a correction/reversal higher that could be major in scope.  A failure below that 42.36 low and our key long-term risk parameter remains required to negate this call.  Against this backdrop, a setback to the 49-to-47-range in the weeks ahead would be approached as a (suspected B- or 2nd-Wave) corrective buying opportunity for longer-term players.

Long-term players should also be aware of the past year’s volatile price action falling deep within the middle-half bowels of the historical 10-year range shown in the monthly log chart below that we believe could contain this market for the generation ahead and where setbacks to the lower-quarter of this range (40ish) would be approached as favorable risk/reward buying opportunities while spasms to the upper-quarter (95 and above) would be approached as favorable risk/reward selling opportunities.

These issues considered, traders are advised to pare bullish exposure to more conservative levels and jettison the position altogether on a failure below 51.33 in order to circumvent the depths unknown of a more significant correction lower that we believe could reach the 49-to-47-range.  Scalpers remain advised to maintain bearish exposure from the 54.50 level OB with a recovery above 55.75 required to negate this call and warrant its cover.

Crude Light Monthly Chart



Heating Oil 240 Minute Chart


Basically the same technical construct detailed above in crude oil applies to heating oil, although this market has yet to fail below even a very minor corrective low defined by 01-Feb’s 1.8619 low.  But as the correlation between diesel and crude is a very positive one, either this 1.8619 low is going to give way or the 6-week uptrend is going to resume in both.

28-Jan’s 1.8280 next larger-degree corrective low remains intact as our short-term risk parameter this market needs to break to confirm a bearish divergence in DAILY momentum below, breaking the 6-week uptrend and exposing what we believe will be a larger-degree correction of Dec-Jan’s entire 1.6380 – 1.9386 rally, the 50% and 61.8% retraces of which cut across at 1.7883 and 1.7528, respectively.

Needless to say, a recovery above Mon’s 1.9386 high mitigates any peak/correction/reversal threat, reinstates the bull and exposes potentially sharp gains thereafter.

Heating Oil Daily Chart


Heating Oil Weekly Chart

As recently discussed, the combination of:

  • Jan’s bullish divergence in daily momentum that defined
  • 26-Dec’s 1.6380 low as the end of a nice 5-wave Elliott sequence down from 03-Oct’s 2.4500 high amidst
  • a return to historically bearish sentiment levels and’
  • the market’s rejection of the exact (1.6379) 50% retrace of Jan’16 – Oct’18’s entire 0.8538 – 2.4500 rally on a weekly log basis above

warns that 26-Dec’s 1.6380 low is one of developing importance and (we believe) the start of a major correction of reversal higher.  If this count is wrong, all the bear has to do is break below 1.6380, our key long-term risk parameter.

On an even broader monthly scale below however, the market is currently trading smack in the middle of its historical 10-year range where the odds of aimless whipsaw risk on a massive scale should be considered higher.  From such range-center conditions and poor risk/reward conditions from which to initiate directional exposure, long-term players should prepare for a more treacherous, challenging and volatile landscape that warrants a more conservative approach to risk assumption that requires identifying tighter but yet objective risk parameters from which to base directional punts.

These issues considered, a bullish policy remains OK, but a failure below 1.8619 will threaten this call enough to warrant paring bullish exposure to more conservative levels with subsequent weakness below 1.8280 confirming the mo failure needed to negate a bullish position altogether and warrant its cover.  Such weakness will raise the odds of a broader correction of the entire Dec-Feb rally where a multi-week relapse to the 1.78-to=-1.75-range will be expected.  For those willing to jump the bearish gun a little, this is OK from current 1.8855 levels with protective buy-stops above 1.9386.

Heating Oil Monthly Chart



Rbob Mar '19 240 Min Chart


Similar to the above two analyses, the extent of this week’s relapse and rejection of 18-Jan’s 1.4796 high reinforces a count calling the price action from that Jan high at 1.4796 a correction/consolidation of the rally from 26-Dec’s 1.2424 low to 18-Jan’s 1.4796 high.  We believe the market is currently in the c-Wave portion of that correction that warns of a rather trendy, emotional assault on 28-Jan’s 1.3413 low or below.

Obviously, a recovery above Mon’s 1.4850 high will negate this call and resurrect our broader base/reversal count.  In lieu of such countering strength traders are advised to watch for a countering bullish divergence in momentum from the 1.34-handle or below for what could be an outstanding risk/reward buying opportunity that could span months.

On a longer-term basis a failure below 26-Dec’s 1.2424 low and our key long-term risk parameter remains required to negate this major base/reversal count.

Rbob Mar '19 Daily Chart


Rbob Mar '19 Weekly Chart

From a very long-term historical perspective, here too the monthly log chart below shows the market’s 10-year action unfolding in a huge lateral triangle pattern where we want to be watchful for bullish divergences in momentum from this structures lower recesses for a preferred longer-term buying opportunity.  Until 26-Dec’s 1.2424 low is broken, we believe Dec-Jan’s rally defines exactly this condition.

These issues considered, traders are advised to position for more lateral-to-lower consolidation that could trip down to the 1.33-to-1.34-area in the week or two ahead.  We will be watchful for a bullish divergence in mo from that area to resurrect a preferred risk/reward bullish policy.  In the meantime a recovery above 1.4850 is required to negate this specific call, reinstate the bull and expose potentially sharp gains thereafter.  And given the market’s current position in the middle of the past month’s 1.4850 – 1.3413-range, aimless whipsaw behavior should hardly come as a surprise., making for a treacherous shorter-term trading environment that should be avoided.

Rbob Monthly Chart

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.