Triple Timeframe Charting Crude Oil into the $100 Key Resistance

Nov 15, 2011: 10:35 AM CST

Oil put in a stellar upside performance from October to present, and now faces yet another “Resistance Challenge” (it’s passed the others so far) into the $100 price resistance confluence.

Let’s view three timeframes of Crude Oil to see what to look for and what might come of the “Battle for $100.”

The main idea at the moment is that Crude Oil prices have rallied steadily into the $100 triple resistance confluence.

It’s triple daily chart resistance due to the July swing high, 61.8% Fibonacci Retracement as drawn, and the simple “Round Number” resistance at $100.

Does that mean price is guaranteed to turn down here?  No – just look at how price initially stalled in late October and broke through in early November above the “Double Confluence” (200d SMA and 50% Fibonacci) at the $95 level.

We also see an initial breakthrough in late October of the $90 level – 38.2% Fibonacci and September swing high.

Inflection points like these tend to be good spots to initiate trades – bears who believe resistance will hold can enter and place a tight stop above the confluence and play for a larger downside target than the small stop.

Of course, bulls/buyers can enter a Breakout Trade as price breaks then holds above a key visual resistance area.

Breaks above resistance tend to trigger “Popped Stops” wherein the short-sellers are forced to buy-back their positions to cover, which joins with the eager breakout buyers to create a “Feedback Loop” (impulse move).

A similar situation exists now at $100 – price is either going to retrace down/stall here, or shatter higher through it, pushing through the “Open Air” particularly if price can clear $105 soon.

Thus, a clean upside break suggests price eventually could retest the $115 region.

A downside reaction here suggests otherwise (the initial target would simply be the $95 confluence, then under $95 targets the $90 confluence).

Let’s take a quick step inside the Daily Price Action to see two timeframes of intraday charting:

I wanted to show the Hourly Chart to give a broader perspective of the last few months in Crude Oil, complete with Divergences and key price levels (mainly $90).

You can see how price formed a lengthy divergence and reversal initially into $90 in September, then reacted lower from the $90 target in early October which gave-way to the final breakthrough in late October.

We’re seeing a similar lengthy negative divergence into the $100 area, which is seen best on the 15-min chart:

The 15-min chart shows us the strong rally from $90 to $99 in November, and zooms in on the divergence in momentum.

It also highlights a short-term support shelf to watch at $97 which recently became a polarity level.

The odds for reversal increase if oil trades under $97, though while price hovers above $97, price is in that key “Make or Break” neutrality zone between the $100 resistance (bullish bias above) and $97 support (short-term bearish below).

The resolution should be interesting so at least monitor this situation if you’re not trading Oil at the moment.

Corey Rosenbloom, CMT
Afraid to Trade.com

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1 Comment

One Response to “Triple Timeframe Charting Crude Oil into the $100 Key Resistance”

  1. SRSFinance Says:

    Crude red, $USO and $UUP green and oil in a rising wedge near resistance. Something's gotta give.