As I wrote about the other day (read here), crude oil futures formed a triangle on the price chart; I expected it to follow last year’s pattern and peak around the beginning of July, and then turn lower.I was nervous early Tuesday, but this call it looking more accurate after the past two day’s action.
Tuesday (I’ve got the green arrow pointing to it) had a big trading range; in hindsight, it was probably the last hurrah for the bulls.The early action showed follow through buying from Monday, and it pushed over the top line of the triangle at 71.82.This extend Tuesday’s rally for a bit, but it was unable to push over June’s swing high of 73.90, and it turned back down.Breaking back into the triangle turned the selloff into a rout, and by the end of the day it was testing the lower line of the triangle.
Wednesday saw much the same action, an early test of the top line of the triangle, but yesterday saw a close below the lower line of the triangle. Note that it also closed below the 50% retracement of the June 23 to June 30 rally, which was at 69.88
Today crude oil has stayed under the lower line of the triangle; that line was resistance for an early rally.Breaking under the June 24 low at 68.06 added to the selloff.
Looking ahead, it appears that today’s selloff may have run its course.Momentum is still bearish, however.The June 23 low at 66.37 (the base of the triangle is the next support; breaking that would open the door for a bigger selloff, probably targeting the low $60s.
There it goes…………
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