Broken Andrews Pitchfork Grid on Crude Oil

Dec 7, 2009: 4:21 PM CST

Earlier this morning, I posted on USO in “US Oil Fund Threatens to Break Support.”  Let’s step up to see the Crude Oil Index ($WTIC) in StockCharts (prior to today’s close – end of day data only) to see the current … broken … Andrews Pitchfork Grid on Crude Oil prices.

Starting with the December 2009 lows near $35 per barrel, we advance the pitchfork to the March 2009 highs and draw to the April 2009 lows to produce the resulting grid (you can recreate this exactly in StockCharts).

I’ve taken an extra step and drawn a lower ‘parallel’ trendline (black) originating off the October lows in the same angle as the prior Pitchfork grid.

First, take a look at how the dominant “Pitchfork” has – mainly – contained the rise moving forward, as price oscillated between the upper and lower bands as well as the midpoint – with two exceptions (‘overthrow’ in June and ‘underthrow’ in September).

The Andrews Pitchfork tool is useful to define current structure (trend and trend boundaries – think of it as “Auto-Trendlines”) and give possible trade set-ups (if confirmed by other methods) as price tests a pitchfork band (line).

That being said, price is currently under the lower Andrews Pitchfork line which ends just above $81 currently.

In fact, price is also under the black ‘parallel’ line I’ve drawn that originated with the September lows.

What does that mean?

It’s bearish for now, and will be bearish as long as price remains under the lower line.

If anything, it’s a clear signal that price is no longer ‘contained’ or ‘following’ inside the upper and lower boundary lines, and when this happens, it can signal an early warning for a potential change in trend.

That’s not to say we collapse, but that the uptrend may now be in question and we should look lower for possible support levels.

Of course, any potential move back up into the trendline would be bullish, but until then, look for the lower boundary to provide possible resistance on any move up.

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Corey Rosenbloom, CMT

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4 Comments

4 Responses to “Broken Andrews Pitchfork Grid on Crude Oil”

  1. Hewison Updates us with Videos of the Dollar, Gold, and Crude Dec 17 | Afraid to Trade.com Blog Says:

    […] Monthly Gold Prices Hint at Correction A Look at Gold Prices Year to Date in 2009 Key Trendline Breaks in US Dollar Index Broken Andrews Pitchfork Grid on Crude Oil […]

  2. Hewison Updates us with Videos of the Dollar, Gold, and Crude Dec 17 | Penny Stock Trading System Blog Says:

    […] Monthly Gold Prices Hint at Correction A Look at Gold Prices Year to Date in 2009 Key Trendline Breaks in US Dollar Index Broken Andrews Pitchfork Grid on Crude Oil […]

  3. SP500 Gann and Andrews Picthfork Updated Chart Art | Afraid to Trade.com Blog Says:

    […] Dec 7 (’09):  “Broken Andrews Pitchfork Grid on Crude Oil” […]

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