Well, it’s just one day, but I’ll take it. Crude is down about 2.25% as I am typing this, and as I dedicated the entirety of my own weekend posts to energy shorts, it’s fitting. As for it being only the 2nd day in a string of 14, well, a thirsty man in a desert isn’t going to argue the fact that his cool water is in a Dixie cup. He drinks it gladly.
Look! Oil has climbed above its June-Aug resistance line at $46.10, and at today’s high of $46.46, has climbed 19% off of its Aug 3 corrective low of $39.19.
More importantly perhaps, is that the structure of the Aug upmove exhibits bullish form, which “warns” us that the strength represents the initiation of a new advance within the larger intermediate-term recovery from the Feb low at $26.05, and projects to a minimum upside target of $55.00 in the weeks ahead.
Any forthcoming “digestion weakness” should find strong support at $44.60 to $43.20 prior to a resumption of the move to $55.
Crude oil’s strength has been contained (so far, at least) by our friendly local Fibonacci line whose level is $45.14. The high for this session for crude oil………$45.15. If it holds, cue spooky music. If it’s breached, cue eye-rolling. UPDATE! Cue eye-rolling. We’ve breached the level. It’s no-man’s-land at this point.
Today’s upside reversal action comes on the heels of a bearish Inventory Report, and from a new low in the vicinity of important, intermediate-term support at $38.90, which represents the 50% retracement level of the entire Feb- Aug advance.
In addition, buying interest emerged at the lower-boundary zone of the June-July down-sloping corrective price channel, classic action into downside channel exhaustion.
Of course, Oil must preserve today’s gains, and follow-through to the upside to confirm a significant turn.
The action so far today is very promising technically– and provides preliminary evidence that Oil has completed the correction of its initial, intermediate-term recovery period.