Crude Oil Breaks Higher - Forecast to Gain Further

Index Strat Risk Target Oil [B]FLAT[/B] Gold [B]FLAT[/B] Silver [B]SHORT[/B] 13.90 < 8

[B] Long-Term Technical Forecast for Crude Oil[/B]

I maintain that the long term trend is down. The key is finding the point at which the probability of a resumption of the decline outweighs the probability of a continuing correction. Since late 2008, crude has traded in a range of roughly 40-60. A possible wave count is an expanded flat, which would require a push above 59.66. It may also be that a triangle is underway and that 59.66 will not be breached. Either way, clarity is lacking structurally at this point.

[B]
Short-Term Technical Forecast for Crude Oil[/B]

Crude oil prices have thundered through triangle support, opening up a move towards key Fibonacci support and perhaps further declines. Next price floors are former spike-lows and the 61.8 percent Fibonacci retracement of the 39.40-54.00 move at 45.00. Given extremely oversold conditions, there is a distinct possibility that prices will see a short-term retracement. Yet momentum remains to the downside, and a break of 45.00 would only confirm that fact. Resistance is former support at 47.00.

[B]
Long-Term Technical Forecast for Gold[/B]

Gold is oscillating between the 55 and 200 SMAs. After bouncing from the 200 day early this week, price is approaching an area stacked with technical levels. There is the 50%-61.8% of the decline from 970 along with the 55 day SMA and a potential resistance line drawn off of the February and March highs. The line crosses through 922 on Monday. The trend is down as long as price is below 970 and the objective is below 692.

[B]
Short-Term Technical Forecast for Gold[/B]

Gold prices have thundered through support and now seem likely to test significant lows near the 865.00 mark. The COMEX contract had been stuck in a progressively narrower trading range, but today’s decline clearly went below the range low. Next targets now include 3-month lows of 865.00. A break of said level would likely go on to test the bottom of the contract’s multi-month trend channel at approximately 850.00. Near-term resistance is former support at 890.00.

[B]
Long-Term Technical Forecast for Silver[/B]

The drop from the March 2008 high to the October 2008 low was in 5 waves, indicating that any subsequent rally should prove corrective. The rally from 8.65 was corrective and price should remain below 13.90 on its way lower. There is a potential resistance line drawn off of the February and March highs. That line crosses through 13.03 on Monday.

[B]
Short-Term Technical Forecast for Silver[/B]

The COMEX Silver contract finds itself in much the same position as gold, as silver prices have broken key trend lows. Subsequent price targets become previous spike-lows near the 12.000 mark, and a break lower would signal a move towards 11.50 is likely.