Crude oil came into the week after consolidating under the big level at 50 for better than two weeks. This was right at the 200 day SMA, not where you want it to stall if you are long. So where does it go from there? Monday left no doubt. A strong move lower. Momentum turned down as well. Rut-roh. So is this the end for crude oil? Let’s take a look.
The chart below shows a couple of different scenarios for crude oil. The first is the bearish one. With the move lower Monday a lower higher is established. A Measured Move to the downside would now give a target to about 40. This would continue the pattern of a wide range but lower highs and lower lows. Momentum is in step with this scenario. A break of the prior support/resistance level near 47.50 Tuesday would add weight to this scenario. But everyone is leaning this way.
So that leads to the bullish scenario. This will need confirmation from a reversal higher. But here is what to look at. The price is at support, two ways. First the horizontal support and then second the rising trend support. If it wants to bounce this is a good place. The RSI, although falling, is still in the bullish zone, and if it were to reverse would set up a Positive RSI Reversal with a target to about 52.50.
So which will it be? Price is falling so one must favor the downside for now. But be mindful of where support lies and ready should it reverse.
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.