Something's Gotta Give

If you use Intermarket or Cross-Market Analysis in your trading or investment decisions, you’ve probably noticed something very strange over the last few months. Let’s take a look at “What’s Going Wrong” from a classic Intermarket perspective which leads us to “What’s Gotta Give” in terms of a building reversal. First, the closer perspective of five Cross-Market quick charts:  

Oil or Gas?

Hydrocarbons have become the lifeblood of this modern era.  And with a huge economic incentive for finding and extracting them, drillers have scoured the world in search of this finite resource.  When they do find it, there is nothing more thrilling than bringing this raw form of energy to the surface.

Examining Crude Resistance

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.”    

Key Levels to Watch in Crude

Stocks and Crude Oil performed well in October, breaking critical weekly (and of course daily) resistance levels to shift the dynamic to the buyers. Let’s start with the weekly chart of Crude Oil and focus on the key price levels to watch going forward:    

Unconventional Oil

Each year a small portion of the world’s finite oil supply is drained.  And over time this annual draw has grown larger in a world that seems to be getting smaller.  As global commerce gains fluidity, the demand for this hydrocarbon appears to be insatiable.  

Oil Stocks Deeply Oversold 2

The recent recession-fear craze hammered commodities prices, crushing the stocks of the companies that produce them.  Commodities stocks were wholesale abandoned by frightened traders, left bludgeoned and bleeding.  But driven to deeply-oversold levels, they got incredibly cheap relative to their underlying fundamentals and bull-market precedent.  Oil stocks are a shining example of this great opportunity.

Crude Running Into Resistance

What’s going on with Crude Oil at the moment? Let’s take a look at the Daily Resistance Level along with a “step-inside” perspective from the intraday chart. Let’s start with the prevailing Daily Chart trend – it’s a downtrend as evidenced by the progressive series of lower price lows and lower price highs, which is confirmed by the EMA Orientation (the 20 EMA consistently resides under the 50 EMA).

Crude Running Into Resistance

What’s going on with Crude Oil at the moment? Let’s take a look at the Daily Resistance Level along with a “step-inside” perspective from the intraday chart. Let’s start with the prevailing Daily Chart trend – it’s a downtrend as evidenced by the progressive series of lower price lows and lower price highs, which is confirmed by the EMA Orientation (the 20 EMA consistently resides under the 50 EMA).

Brent soars vs. West Texas

This chart has an interesting look:

How To Trade Retracement Plays

In general, crude oil prices are closely following stock prices, including the recent rally into confluence resistance. Let’s chart that key resistance level to watch on the daily chart in Crude Oil: Let’s start with the current structure and then take a moment to learn a few charting lessons from similar set-ups in the last few months.