Crude oil’s 50-day moving average rose above its 100-day mean for the first time since June, an occurrence known in technical analysis as a “golden cross.” A golden cross is formed when a short-term indicator exceeds a longer-term one, and is often interpreted by traders as a sign that prices will increase. That may not be the case in this situation as the cross did not occur while the averages were rising, according to Schork Group Inc. “It’s giving a rather confused signal about the market,” Schork Group President Stephen Schork said in an interview from Villanova, Pennsylvania. “I would prefer to see the 50, 100 and 200-day averages moving in the same direction before I’d say a trend has been established.” The price of oil futures on the New York Mercantile Exchange averaged over the past 50 days was at $76.36 a barrel today, compared with $76.22 for a 100-day period. The 50-day indicator had been below the 100-day since June 10, and last crossed above it in mid-February. Both the 50-day and 100-day measures have dropped since last month. The 50-day average has outpaced the 100-day because its decline has been less steep. Oil futures for October settlement on the Nymex last traded for $77.61 a barrel as of 2:34 p.m. London time, about $1 higher than the 50-day and 100-day averages. Prices encountered “real resistance” earlier today as they approached their 200-day moving average for the first time since Aug. 12, Schork said. If crude fails to break this threshold, currently around $77.47 a barrel, in the next few days it may plunge to the “low $70s,” he said. In a three-month period after the last golden cross in mid- February, oil prices advanced about 16 percent, reaching this year’s peak of $87.15 a barrel on May 3.

Source