The spot crude price action is playing out exactly how chart readers predicted. Spot crude topped out around the $52 per barrel level. That was a psychological resistance point because it was a perfect 100% move from the $26/bbl lows in early 2016. Logically, it makes sense that this would be a top.
From that $52 level, oil fell sharply to $46. While only slightly more than a 10% drop, this price action combined with the 100% price move up before, indicates a technical top. And don't forget how overbought crude oil was and how every analyst/market commentator was bullish at $52.
Remember: When everyone is bullish on a stock, commodity, currency, ect, that's when the top is in.
Think about the bearish sentiment at $26 that turned out to be the bottom. With a top at $52 and a pullback to $46, you would expect a buy-the-dip bounce. However, any bounce is a short sell as long as $52 is not breached. Sure enough, crude shot back to $50+ Wednesday morning on oil inventory numbers.
The next drop will take out the $46 recent low and extend itself another $6 to $40/bbl. Look for this to happen within a week or two.
Are you ready for the tsunami of volatility that is approaching fast? 