Looking For A Bottom In Crude Oil? Wait…
Many participants think they are savvy enough to time market bottoms, and many suffer big losses trying. The recent price action in Crude Oil shows how this happens.
After falling 55%+, Crude Oil bounced about 30% off of its March lows. The Oil Bulls rushed in assuming the fall was done and thought they would see an 80-100 bbl price extension, did not happen, and will not happen for some time.
Rather than rushing in to buy the falls, participants should study the fall, and the bounce, the numbers are seen in Leonardo Fibonacci work, Leonardo was a mathematician who was born in Italy around Y 1170.
It is believed that Fibonacci discovered the relationship of what are now referred to as Fibonacci numbers while studying the Great Pyramid of Gizeh in Egypt.
Crude Oil will bottom and it will be time to buy Oil and energy stocks to benefit from their coming rally, that time is not now.
The bottom will form when demand is greater than supply, a condition that will be visible on the price chart of Crude Oil as it develops.
Consider using RSI (relative strength indicator) or other technical indicators to find when Oil has bottomed. It is likely most will miss the real bottom with these techniques and buy into the uptrend after it is under way. As the Trend is Your Friend. And tying to catch a Falling Knife is dangerous.
In the past, following trends has been a profitable strategy and it is likely to be profitable in the future, even when missing the bottom and the top.
The alternative to trend-following is knife-catching, a strategy that had led to pain in the past and will likely result in severe pain in the future.
|Bearish (-0.33)||Very Bearish (-0.64)||Neutral (-0.17)||Neutral (-0.18)|
|Bearish (-0.36)||Very Bearish (-0.66)||Neutral (-0.15)||Bearish (-0.26)|
After moving above 48.65, WTI Crude Oil failed to inch higher and is trading below it 20 and 50-Day MA’s and below 13% Fibonacci.
ADX started to show Bearish tendencies and RSI 14 moves below 50.00. So, may see a Bearish wave, as Crude Oil is moving beyond the Key resistance of the descending channel.
A break below 46.65 is required to prove the Bearish wave will be valid as long as 49.70 holds.
Support: 48.65 – 48.00 – 47.00
Resistance: 49.70 – 50.00 – 50.25
Direction: Sideways to South
Have a terrific weekend.