Friday, October 22, 2010

Lines on Charts: "Crude Oil Topping Pattern" (USO)

The futures are up 73 cents at $81.29.
Bloomberg had a story this morning that quoted a bullish oil analyst as saying "If you draw a line...". I started giggling.
[I'm sure it was a manly giggle -ed]
Here's Mike Paulenoff via The Market Oracle with some lines that draw [cute -ed] a different conclusion:
Nearby oil prices look like they are carving out a top formation off of the October 7 high at $84.43. In particular, the series of lower highs on each rally since the October 8 decline is dictating the unfolding pattern.
As long as the series remains intact, the oil market will be on the defensive.  That means that as long as $82.70 contains any forthcoming strength, the developing pattern will continue to put pressure on key near-term support between $79.80 and $79.25, which if violated and sustained should trigger downside acceleration towards $77.00-$76.50 next. 

ETF traders may want to watch for downside in the US Oil Fund (NYSE: USO).