We’ll now look at the commodity that had everyone's attention for the past few years: Crude oil.
Let's face it: When oil headed higher from $75 a barrel, it was an easily identifiable trend. Price easily broke every swing it left, and every swing low it left behind as support held, all the way from $75 a barrel up to nearly $150 a barrel! Breakout traders were rewarded every time they bought a new high for the move, and traders who were more comfortable simply buying pullbacks in a simple trend channel got the same satisfaction. The ride in crude was a one-way ride from $75 a barrel to nearly double that at $148 a barrel.
Was there an early sign from price? Once again, a simple base line that acted as support when a potential selloff began was the key. When the base line successfully stopped the fall in the price of crude oil, prices turned back higher and never looked back. You can see the same type of base line support was tested and held at $95 a barrel, and once again, when it held, the trend higher accelerated.
The signs are usually there for all of us to see. If we look at the charts with an open mind and a clear head and know the signs from studying past price history, these signs are there for us to take advantage of.
Next, we’ll analyze what the markets had in mind for crude oil in the second half of 2008 and early 2009.
More in Part 7 tomorrow…
Timothy Morge
timmorge@gmail.com
www.medianline.com
www.marketgeometry.com
