Crude Oil Analysis

The weekly chart of oil is shown below, with the lower 34 and 55 MA Bollinger bands at extremely oversold conditions (which are starting to rise since the last update), indicating how severe the recent decline was. Although the lows for oil have been put in place, it could take 2-3 years to consolidate the price of oil below $100/barrel before any higher prices occur…this is going to take some time. The upper and lower 21 MA BB’s are quickly approaching the price of oil, thereby creating a potentially narrow trading range between them…this will cause a breakout to the upside or downside (likely to the upside based upon full stochastics). Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 2. Based upon the sharp trajectory of the %K in stochastic 1, it appears oil has an opportunity to have continuous support in the pricing mechanism until sometime between July and October 2009. The weekly chart indicates an extremely oversold condition not seen in severity at all for the data presented below. Based upon this, oil could potentially climb to $60-70/barrel later this summer if the pricing mechanism is not manipulated and follows the trajectory path laid out with full stochastics. I will update the Horizon Beta funds later on tonight to review opportunities based upon observations presented (the HOU.TO has remained a speculative buy for the past few months).