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01/25/20 8:40 AM
THE ANALYSIS PER THE CLOSE OF Fri. Jan. 24, 2020: NY Crude Oil Futures closed below our indicating ranges on the Daily level and it also settled beneath our broder set of 10 indicators indicating weakness at this moment. The market closing today at 5419 is immediately trading down about 11% for the year from last year's closing of 6106. At the moment, this market has been declining for 4 months and if the market continues to remain beneath the previous month's low of 5535 on a closing basis, then it will remain weak for now. This price action here in January is reflecting that this has been still a bearish reactionary trend on the monthly level. As we stand right now, this market has made an outside reversal exceeding the previous month's high reaching thus far 6565 and it has broken last month's low falling to 5385 while it is still trading below last month's low of 5535.
ECM COMMENTARY
We have reached the target on the ECM 7 days ago, which was Sat. Jan. 18, 2020. A high forming on this precise target will warn of a correction. However, a low would imply a rally thereafter. The last high was July 2008, 137 months ago. We could see an end goal form with this turing point in 2017 producing a significant high. On the other hand, the lack of such a precise target would only imply that this market is not the main focus of net capital movement. It would perhaps signal a temporary change in trend based upon its own timing lining up with markets in its particular sector.
The last ECM target date was Sat. Jan. 18, 2020, which was about two weeks ago. This at least warns we need to pay attention to at least this sector coming into a possible alignment and shift in trend with theis trurning point in the ECM.
RECENT ACTION
Up to now, the market remains quite bearish below all our system support indicators with resistance starting at 5760. The broader cyclical system indicators are also in a bearish position while the long-term trend and cyclical strength are bearish.
The historical major high took place back in 2008 and we have then witnessed a bearish subsequent trend for 11 years. The correction since that high has been a 17% decline with the next general key area to watch would be 10102 and a closing beneath that would technically imply a more correction process unfolding on a bit more sustain basis near-term. There was a subsequent correction low that formed during 2016 and we have bounced some 108% which has been a very strong rally to date. We have elected both long-term yearly buy signals during this bounce currently which suggests that a pause in the decline was warranted.
Meanwhile, our technical resistance stands at 8653 and it will require a closing above this level to signal a breakout of the upside is unfolding. Nevertheless, our technical support lies at 4533 which is still holding at this time. At this moment, the market remains between these two projections leaving it neutral on a technical basis.
Looking at our timing models, it is possible to witness a turning point come February in NY Crude Oil Futures. Therefore, remember to watch for this possible development at the time. The last cyclical event was a high established back during September 2019. Normally, this implies that the next turning point should be a low. However, to date, this market has already exceeded that previous high established at 6338. This strongly implies we are in a cycle inversion process, which tends to be rather bullish overall. Last month produced a high at 6234 but closed on the positive side and so far, we have exceeded last month's high. We now need to close above 6234 on a monthly basis to imply a further advance to the upside immediately for now. The projected resistance for this week stands at 7027 and we need to close above this level on a weekly basis to maintain any upward momentum.
Some caution is necessary since the last high 6338 was important given we did obtain one sell signal from that event established during September 2019. That high was still lower than the previous high established at 6660 back during April 2019. Critical support still underlies this market at 5122 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still holding and is trading above last month's high. Overall on a broader basis, looking at the monthly level on our models, this market is currently in a rising trend. We see here the trend has been moving up for the past 12 months. The previous low of 4236 made during December 2018 on the Monthly level has held and only a break of 5407 on a closing basis would warn of a technical near-term change in trend. The previous high made during September 2019 on the Monthly level at 6338 has now been exceeded in the recent rally. However, we still remain below key resistance 5993 on a closing basis.
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