Saturday, August 28, 2010

Light Crude Oil chart analysis

This past week, crude oil rebounded from oversold situation with above than average volume (based on ETF USO information), how long will this rally last?  Is this rally short term, intermediate term or long term?  As you can see from the chart below, crude oil is facing triple resistance ahead at ~$77 area (50DMA, 50% Fib retracement and lower trend line of July-August rally channel).  Let's put aside reckoning of how much probability that crude oil will break this triple resistance, just focus on reactions: if it does break above that resistance, then we should long the equities, otherwise the trend remains down.

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