The Oil Reversal in Progress
|Let's take a closer look at the chart below (chart courtesy of www.stooq.com ) and assess the likely crude oil price path ahead.
We wrote these words yesterday, and they ring true also today:
(…) The short-term situation hasn’t changed much. Crude oil futures keep trading inside the blue consolidation and around the red support/resistance line and the 50% Fibonacci retracement.
They’re also still trading inside the rising purple trend channel below the upper border of the orange gap. Therefore as long as there is no breakout above these resistances another attempt to move lower is likely.
Yesterday’s candle shows that bulls have been rejected at the upper border of the blue consolidation, and the bears keep the initiative today. They’re currently working to close the bullish green gap, as black gold is trading below $56.25 as we speak. The daily indicators are supporting the downside move, and the bears’ next target would be to break down from the blue consolidation.
Summing up, after yesterday’s upswing that partially fizzled out, crude oil is moving lower today. While the short-term picture remains unchanged, prices have backed down from the orange resistance and back below the horizontal red line and the 50% Fibonacci retracement. The bears’ objectives are closing the green gap and breaking below the lower border of the blue consolidation reinforced by the 38.2% Fibonacci retracement. The short position remains justified.
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