Crude oil is at a crossroads. After a mildly disappointing Inventory Report, prices reacted disproportionately to the downside, giving back nearly all of Wednesday's rally from $45.92 to Thursday morning's high at $48.25.
If Wednesday's low is violated -- and if the prior two June lows at $45.83 are violated -- oil will find itself vulnerable to downside continuation quickly to the $43 area.
Conversely, as long as the $45.92-$45.83 series of June-July lows remains intact, my near- and intermediate-term pattern work argues that oil is finishing a June-July bullish digestion period ahead of another powerful upleg.
