As outlined in the chart above the price action of crude oil since 07th Sep, 2011 to 21st Sep, 2011
took the shape of a bearish Head & shoulders price pattern.
The heavy selling pressure witnessed during the previous session of trade led to a severe breakdown in crude oil prices below its neckline support placed at the `4074 levels.
We would like to point out that this is an extremely bearish signal for the price of crude and any pullback from current levels will meet selling pressure.
The measured implication of the price pattern gives a downside target of Rs 3865 levels over the short term to medium term time frame.
The RSI indicator has been continuously trading with negative divergence despite the recent pullbacks supporting the bearish developments in price action.
We recommend traders to sell 50% at current levels and 50% on rise between Rs 4061--Rs 4075 levels with a stop loss placed above Rs 4123 levels for immediate downside targets of Rs 3940 / Rs 3865 levels expected to be achieved in 3-4 sessions of trade.
MCX CRUDEOIL OCT. CONTRACT OPEN Rs 4184 HIGH Rs 4184 LOW Rs 4005 CLOSE Rs 4018
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