WTI Crude Oil is likely to head lower in to next week and here is why
WTI Crude has had a fantastic run higher (if you are a bull!) for 2 years. The strong recovery from $26.05 initially topped at $55.24 at the beginning of 2017 & sold off to $42.05. A powerful rally followed, taking prices to a high of $66.66 in just 7 months, a gain of 58%. The total gain over the 2 year recovery was 155%
The weekly chart above shows how the recovery halted just below the 50% recovery area of $69.15. However we have to go to the monthly chart below for a clearer reason for the potential end of the recovery. See how the red 200 month moving average at $65.00/$65.30 worked almost perfectly as resistance. This was when we warned our subscribers to exit all longs. We did not manage a monthly close above $65.30.
Looking at the shorter term 4 hour chart below we see another reason why the recovery came to a halt. The red 200 period moving average worked as resistance, just below the 61.8% Fibonacci resistance at $63.38.
There must be some bulls caught in a trap who used this as their opportunity to escape. A great opportunity too for bears to regain control.
So we see a strong indication that the price will head lower from here, signalling a short term bear trend starting to build now. We have to assume this is only a correction to the 2 year bull trend at this stage. We are likely to head towards the first support at $61.35/60.85. Failure here obviously keeps bears in control initially targeting $60.10. Below $59.70 keeps the pressure on for a test of the February low & 100 day moving average at $58.20/58.07. The reaction here will help us decide if this is still a correction, or a more serious bear trend is developing.
A break below the 38.2% Fibonacci at $57.26 signals a move towards the December low & 200 week moving average at $55.82/55.60.