Jun 08

Pressure on Oil

by Mike Paulenoff, Fri June 8th, 2007

Oil prices and the US Oil Trust (AMEX: USO) apparently are not immune to the shocking surge in longer-term interest rates. That said, my pattern work since the 5/31 low at 47.59 into yesterday's new recovery high at 51.24 exhibits very bullish form, which suggests to me that regardless of the spike in longer-term rates, the USO was destined to pull back after its 6-session, 7.7% vertical upmove. Now, whether the current pullback will be deeper than expected because of the pressure from rising interest rates, we will have to see. However, as of right now, I am expecting weakness into the 49.50-49 area prior to the start of the next upleg, within a larger, constructive pattern off of the January low at 42.56.
Chart

Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!