OIL: What Goes Up, Must Come Down!
As highlighted yesterday in our Market News article (click here to read), West Texas Intermediate (WTI) was looking very overextended and approaching our key resistance level at $60.00. We come just shy of our $60.00 resistance level, reaching a high of $59.50 and forming a very nice head and shoulders pattern.
As mentioned in my previous article, we did form a rising wedge, since then, we have broken out of the wedge to create a perfect head and shoulders pattern, which has broken down nicely as well. So we had two bearish patterns form for us, this gives us ample warning of a potential reversal. The pullback to form our right shoulder lined up with our fib region as well, adding further confluences in our favour.
Speculation that global slowdown and demand for Oil is partly the reason for the selloff this morning, I am hesitant to believe this, as it is nothing new for the market to digest so it shouldn’t really affect the commodity. At the time of writing, WTI is currently trading at $58.40, our first target could be at $58.00, with a more extended target towards our supportive region seen at $57.50/$57.00. Today we do have crude Oil inventories which is certainly a market mover, this is released at 14:30 GMT so do be aware of this news release if you are currently in this position....