CLN12 - Update for June 15th, 2012

Price analysis for the week of June 15th, 2012:

Market Overview: After a period of free-fall, CL has once again begun to trade within definable ranges. While the price action itself is quite volatile, this in itself suggests to me we are closer to the end of this seasonal correction rather than the beginning. CRI's 1st Two Week's of Q2'12 study (pdf link)suggested commodities in general and energy in particular would under perform but given CL's appreciable drop through the first half of the quarter, one ought not to be too surprised if we went through a few weeks of 'take back' through the end of June and into July. The big unknown event (that being the June 17th Greek elections) are now upon us and given the market's propensity to either be overly optimistic (in good times) and conversely overly pessimistic (in bad) one might take the chance that a 'worst -case-scenario' is already priced into the market. Should there be any positive surprises from this event, one shouldn't be surprised to see an appreciable oversold rally develop.

Trading Strategy (1 week): As stated previously, 'we have officially hit our target zone for this correction. The target zone is based on the 1 year and 2 year 50% levels and currently sits between $89.445 and $92.75. It should not surprise us then to see that the market has basically consolidated around these levels for the past few trading sessions.'

My expectation for this coming week is a test of the Gartley bearish pattern price target Point D on the 2 hour chart above ($86.01). There are several smaller price objectives in and around this area which gives me a high degree of confidence the market wants to test the recent trading range's highs. At that point there should be significant battle between the bulls and bears.

• Should the bears remain in control, they will break the market at the Gartley D. point and I will be looking for a resolution to the current daily AB=CD pattern target ($76.03)....

• Should the bulls take control, they will push prices back up through the significant resistance point of $87.03. A consolidation above this level would bring the 1 year,  2 year and Daily 50% levels back into play ($89.445, $92.75 and $96.28 respectively) but I believe looking that far ahead at the moment is a little premature.

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/