This week’s rally for oil was a short-lived affair. Monday’s rally was supported by good volume and followed on from the buying we saw in the previous candle, so was expected. But it was the following day which ran the warning flags up the pole as higher volume failed to deliver any further upside momentum with the market closing on a small doji candle – a strong signal of weakness ahead which duly arrived on Wednesday and followed through to today’s price action with the commodity now looking set to close down on the week. What will be interesting to see is the volume for the session. If it is higher than yesterday’s volume which is what we should see, this will confirm the bearish picture for oil as we move into the low volume node at $42.40 per barrel.
Moving to the weekly chart note how we have broken below the minor support level at $44 per barrel and now, and with virtually free space below, a move into the $30 per barrel region looks a distinct possibility.