Since Crude Oil had been one of the most discussed topic by a lot of traders and investors in recent weeks, i decided to study the recent operation and posit down my analysis.
See the rectangle boxes? Those are areas of accumulation for higher price to come. See the first rectangle box? Big operators were checking to see if the strength around the support was strong. Looking at what happen previously around Oct 30 - Nov 12, big operators were not ready for an upmove yet, that was why prices retreat so that they could accumulate more to hide their true intentions of higher prices to come.
The second rectangle revealed that prices had hit a very strong resistance and it is in an absorption mode. Prices did not fall further after hitting resistance. This is a very strong clue that demand was overcoming supply. The market needs to absorb all of those who wanted to sell before all the selling is over for higher price. The longer it ranged, the expectation is higher for the price to trend higher.
Finally, the third rectangle box, the market is constantly hitting strong resistance. I judge the area of the third rectangle box as a lack of supply. This lack of supply is the over rising bullish factor. A close under the low of last Friday 24/12/2010 will be bearish for the near time. Otherwise, all evidence points toward the bull.
Are your prepared for higher oil prices that could aggravate inflation and hurt economic growth?
Ronald K
