Downward Reversal in Oil Is Knocking on the Door / Commodities / Crude Oil

Crude oilhasn’t closed higher yesterday and the previous series of rallies appears toface stiff headwinds. Is this it, or can the oil bulls pull a rabbit out oftheir hats? After all, they’ve reversed Monday’s downswing already. Or does theprospect of wide spectrum U.S. - China uncertainties have the upper hand? It’smaking itself heard across the board and crude oil is no exception. Let’sassess the technical picture now.

We’ll takea closer look at the chart below (chart courtesy of http://stockcharts.com).

Yesterday’scrude oil trading was almost a mirror image of the Monday’s session. While thebulls eked out minor gains on Monday, it was the bears who was strongeryesterday. The price closed down below the 50% Fibonacci retracement yet again. This has been the fourthunsuccessful attempt to overcome it in a row.

As we havepointed to in our yesterday Alert’s title (“The Shifting Sands in the Oil Arena”), this suggests a bearish reversal of fortunesahead. Indeed, at the moment of writing these words, black gold changes handsat around $62.20 which is back inside the blue consolidation.

Should thecommodity keep moving lower from current levels, we’re likely to see at least atest of the lower border of the blue consolidation. Such a move lower is supportedby the unconvincingly low volume of the preceding upswing days.

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Nadia Simmons
Forex & Oil Trading Strategist
PrzemyslawRadomski
Founder, Editor-in-chief

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