Thursday, August 4, 2016

Crude Oil Bounce

As WTI took out the psychological and technically important $40 level, stops must have been triggered. My comment via Twitter,
And now those levels are within reach. At this stage the move down from $52 is likely still intact and the bounce is just that, with further lows in store, before a more serious corrective rally can be mounted.
The Fibonacci .382 retrace level is rather modest and could be expected prior to a resumption of the existing trend.


  click to enlarge

Note there is NO positive divergence on the RSI in the above chart.

Additionally seasonal and fundamental headwinds continue, with the USD relatively steady near it's highs.    
3 year chart
Notice that huge move up from May 2014 to Mar2105 for the USD roughly coincides with the period of greatest destruction in Crude prices.
 Any USD action that starts to look technically bullish will be a significant drag on Crude's ability to sustain a rally.

On the flip side, a retest of the lows of the USD range down around 92 will be supportive. 

Risk remains of a retest of the May lows as WTI carves out a diagonal 5th wave .  It is August and 
frankly if a diagonal 5th DOES show up it could well be a a grinding choppy move lower that steals from everybody.










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