Crude oil futures have been one of the beneficiaries of the recent optimism about an economic recovery, rallying 38% in the past five weeks. Recent concerns about the recovery have pressured crude this week. Let’s see what the chart says.
Below is the daily chart for May crude oil.Yesterday’s selloff was the big one, pushing it under $50 early, then gaining steam to the downside as equities deteriorated.it’s now at an interesting point.It’s approacing a test of the trendline off the lows of the rally (the intersection is 47.75 today, 48.04 tomorrow).MACD (the bottom panel) is verging on a bearish crossover, and a 50% retracement of the rally is at 47.04.On the other hand, momentum (the middle panel) has dropped to a level to give a buy signal.
The upshot of all this?The weekly crude inventory report is out at 9:30 Central Time tomorrow.I would anticipate crude oil to find support and rally tomorrow, and would be looking for a buying opportunity. Failure to do so may very well spell the end of the rally.
Crude futures are at a crossroads.
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