Wednesday, September 06, 2006

Crude Oil

Here is a daily chart of October crude oil futures. I last commented on this market here.

As you can see the support level at 68.00 has been reached. On this chart I have drawn the boxes which I think are controlling the drop from the July 14 all time high in crude oil. In the August 2006 contract this high was 78.40. The subsequent break carried to a low of 72.80 in the September contract and thus defined a box whose height is $5.60.

The bottom of the current box is at 67.20. I think we will now see a rally about equal to the last rally which was $4.80. It should carry the market close to the top of the current box which stands at 72.80. After this rally the market should drop well below the 68.00 level.

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