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A Critical Breakdown in NYMEX Oil?


Below is what we discussed one week ago. So far, oil is following the script-- a break of the March 2015 low at $42,03 accompanied by a glaring WEEKLY momentum divergence.

Today's press to still lower-lows at $40.60 so far, is nearing my next key level at 39.60. If 39.60 is violated, then the $37.20 area appears to be the secondary lower target that is so important that it is the optimal-price zone from where I will be looking for a very significant technical-reversal signal.

If none develops, and if the positive weekly divergence has disappeared, then we should expect a rapid "unwind" to test the Dec. 2008 low at $32.48. Bottom line: $39.60 to $37.20 is where a reversal must emerge to complete the entire down move from $112.24 (8/28/14 high).

Otherwise, NYMEX Crude Oil will be in route to levels that will forever change the 40-year balance-of-power dynamics of global energy geopolitics. MJP 8/19/15

Today's Yuan precipitated plunge in oil prices has pressed nearby Crude Oil to within 1.5% of its March 2015 low at $42.03.

The likely-- and eventually constructive scenario-- calls for a break of $42.03, and downside follow-through to $40.00 to $39.60-- new bear-phase low that is unlikely to be accompanied and confirmed by a new low in weekly momentum-- a condition that will argue in favor of an approaching, tradable, powerful, recovery rally.

That said, however, if oil presses below $39.60, the positive-momentum divergence will start to disappear into a downside confirmation of the acute weakness-- a situation that will tell us that oil is heading for a full-fledged test of its Dec 2008 low at $32.48.

At this juncture, only a climb that sustains above the 1998-support line, now at $46.65 will argue that oil has established a significant, unconfirmed low that will scare the bears. MJP 8/11/15

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