Simit Patel's  Instablog

Simit Patel
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I'm a precious metals and energy investor as well as a currency trader who combines analysis of geopolitics, monetary economics, energy technology, and technical price patterns to develop trading and investing outlooks. I trade/invest in all timeframes -- from intraday trading in parabolic... More
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InformedTrades Gold Club
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InformedTrades - Learn to Trade Forex & CFDs
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Wealth Management in the New World
  • Key Price Levels to Watch in the Oil Market 0 comments
    Jan 11, 2011 10:49 AM | about stocks: OIL, CRUD
    The price of oil is particularly important to watch, as it dictates much of the operating cost of businesses and cost of living for individuals -- which in turn will affect employment rates, savings rates, debt levels, and consumer spending, all of which are major catalysts that affect financial markets and the global economy.

    Below is a weekly chart of oil. I wanted to note the following:

    1. The 50% Fibonacci level of the 2008 collapse is at approximately 90.10, a level the market has been trading around for the past week
    2. Oil was in an extended rangebound period for much of 2010, before recently breaking out. The upper resistance line of this range is approximately 87.33; if bulls fail to defend that level, the case for a fall back into that range strengthens. The 50 day exponential moving average is also at 87.30 on the daily chart, thus making this an even more formidable level likely to attract many orders. 
    3. If the bulls can hold the upper hand, 104 is the 61.8% Fibonacci level of the 2008 collapse, and may be another price level that brings out the bears. 

    I also thought the monthly chart was worth highlighting (see below). If we fall back into the range -- meaning a close below 87.33 -- a fall down to the upwards trendline may emerge as a key level for bulls to defend. That trendline is currently in the 80-82 area. The upper trendline on the tentative price channel on the monthly chart is at around 114. 

    As always, feel free to share your observations and questions in the comments section below.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: OIL, CRUD
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