Thursday, July 28, 2016

Oil (Price) Spill: Looking At Long Term Price Levels

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*We mostly care about direction and are not trying to predict price.
*That said we wanted to point out where key long term price levels stand for oil.
*As we pass one line we expect another to touch.
*We maintain our bear call on oil as it continues to be in a downtrend.
We heard a lot talked about price expectations over the last few days. After becoming bearish July 11th we pointed out building news of higher production and decreasing global demand. We did not talk recently about price expectations and wanted to look longer term for some key price levels that needs our attention.
Here's a longer term chart for oil (NYSEARCA:USO)(NYSEARCA:OIL)(NYSEARCA:UWTI)
Oil premarket is about $42.
Key Levels For Oil Based On The Last 40-50 Years
We see the next stop being $40. $40 is a major point going back 40 years. Breaking that is very scary and can flip people bearish.
The next stop is $36. The next stop is $31 and the last is $25.
So $40, $36, $31, $25.
Each "holding" break below each price pressures the market to sell to the next price. It's a cascading effect.
What we want to watch for is how we hold each one of these levels. If we bounce and hold above each we know that could be a meaningful short term support.
If we break and hold below that level then it becomes a short term resistance. To go back over such a resistance level would need new positive news.

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Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS