Crude (NYMEX:CLN14) appears to be positioned well for momentum traders as the market has been oscillating in a relatively well-defined downward sloping channel. Traders could use this channel as a “guide” to potential day-trading opportunities; however, trend channel barriers should not be relied on exclusively for trading signals. Rather, traders would be better off using trend channels along with pre-existing S/R pivots in the market to highlight pivotal levels in the market.
Taking this one step further, momentum indicators such as the RSI, Stochastics and MACD can also be used to generate trade ideas. Rallies into the upper trend channel that coincide with a level of resistance on a bearish divergence signal could offer a well-support opportunity to short the market in anticipation of a rejection. The near-term momentum appears to have a slight negative bias with near term support seen at 102.40 and more significant support around 101.73. The slight negative momentum will likely remain in control so long as price remains below the previous peak around 103.66.
Crude Oil 30-minute Bar Chart (e-Signal)