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Getting Technical on Crude Oil

The charts remain bearish on crude oil prices


This week there’s a bearish rising wedge breakdown in crude oil that could worsen the parabolic crack spread I wrote about last week, leading to continued rising gas prices.

Unleaded gas prices are skyrocketing, especially in California, and prices are going up faster than I anticipated despite the downdraft we’ve seen in crude oil since the FOMC meeting of Sept. 12-13.

Crude oil is down about 10% since Sept. 13, when the Fed announced QE Infinity. Prices bounced right back up to resistance levels seen in April and May, then broke down south. Last Wednesday they made new swing lows, and on Thursday we got a pop, but over the past few days, we’ve pretty much lost those gains.

We’re still looking at crude that has a negative momentum bearish divergence. It’s below the zero line and continues to roll over. With the Oil Service Sector Index (OSX) down more than 7% since the day after FOMC announced QE Infinity, it has joined the ranks of semiconductors, networking indices and the steel sector as the worst sectors that you could be in post-QE Infinity. It hasn’t been at these levels since July this year. This week we’ll be watching to see how low we can go with crude oil.

John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options and Trending123.

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