HAS THE OIL BOTTOMED OUT?
- AS SHOWN IN THE CHART ABOVE, WTI CRUDE SAW A MASSIVE FALL FROM A HIGH OF $107 IN JUNE 2014 TO A LOW OF $42 IN MARCH 2015. FROM THERE IT RALLIED TO $63 TILL MAY 2015, ONLY TO RESUME THE DOWNTRED AND MADE A BOTTOM OF $26 IN FEBRUARY 2016 AND IS CURRENTLY TRADING AROUND $33.
- HOWEVER, AS CAN BE CLEARLY SEEN, WHILE THE UNDERLYING MADE A LOWER BOTTOM COMPARED TO THAT MADE IN MARCH 2015, RSI (RELATIVE STRENGTH INDEX) HAS MADE A HIGHER BOTTOM. THIS IS CALLED “POSITVE DIVERGENCE” AND SUGGESTS THAT THE LAST LEG OF THE FALL IS HAVING LESSER STRENGTH AND PRICES ARE NOT WILLING TO SUSTAIN AT LOWER LEVELS.
- ON THE UPSIDE, $34.80 IS THE IMMEDIATE HURDLE, ABOVE WHICH 34 WEEK MOVING AVERAGE, PLACED AROUND $41, WOULD BE THE NEXT MAJOR TARGET. UPON CROSSOVER OF $41, $57 (20 MONTH AVERAGE) AND $62 (TOP MADE IN MAY 2015) WOULD BE NEXT UPSIDE TARGETS TO EYE.
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