Last week the steep fall in Crude Oil prices caught our attention. A failed break out to the upside had come crashing down through support like it was a sieve. It had a real change of character. Roll forward and the damage has continued. Now Crude Oil has dropped nearly 10% from the April high. Will it continue?
The chart below shows some interesting price action going on that suggest the worst may be over, at least for now.
First the price has reached its 200 day SMA. It has moved through less level the last 3 times it touched it, but only briefly, before major rallies have occurred. Next the price has reached the rising trend support that has caught it and reversed its fall each of the last 3 times it has been there. It is also near the bottom of squeezing Bollinger Bands®. The squeeze is what could limit the downside. Momentum has also started to turn. The RSI turned up Tuesday, although the MACD continues to look to move lower.
The signs are there for a bottom in Crude Oil. A reversal at these levels Would not make for an extremely bullish scenario though. With resistance overhead at 51.50 and then a lot of prior price action to work through until 54, it would have a lot of work until you can get very bulled up. On the other side of the coin, a push through these support indicators and below the March low at 48 would be a major breakdown and continuation to the low 40’s would be in the cards. For now, watch the current level. It may be the bottom.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.