Technical Analysis of Oil
It seems that the oil price has lately been following the same fluctuating trend of newspaper headlines; one week there appeared to be a little light at the end of the economic tunnel and the price would start to lift its head, only to fall back once it becomes clear that this too, was a false alarm and that a large part of the world might indeed be heading for another recession.
If we look at fig. 12.01(a) we see that the price reached a high of 126.88 on 8th April 2011. After that economic realities started to kick in and it began moving down, in a process characterised by intermittent up and down swings. The highs were progressively lower and so were the lows.
Right now we are in what will quite likely prove to be one of the ‘highs’. The price has just emerged from the Ichimoku cloud. Both the blue Kijun Sen and the red Tenkan Sen lines are also above the cloud, confirming a short term bull run.
The fact that the Tenkan Sen has broken through the Kijun Sen in a downward direction is, however, a warning signal that the bulls might be running out of steam already. Any bull related profits could well be short lived. We can really only talk about a bull market if the price breaks through the recent high of 116.44 we saw on 8th November. Until then it is most likely just a continuation of the recent up and down swings, with the turning point getting very close.
If the price drops below the cloud it might well be on its way to the $100 mark this time and there could be room for a quite decent profit in a short trade.