Gabrielle W

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April 3, 2020

 

Let's talk about Oil

 

 

Oil has taken a huge hit, driving the energy sector down and resulting in mass layoffs and a lot of uncertainty and fear. Today I wanted to give everyone a deeper look at oil from the technical perspective. I am a firm believer in trend lines over head lines and focusing in on price action. 

Historically, Oil has a pattern of V wave recoveries, even from a fractal standpoint. From an outside perspective, one might say "Once it reaches the bottom price, it doesn't stay there for very long and moves up with consistency from that point." History doesn't always repeat itself but it often rhymes and I anticipating something similar to occur this time as well. 

A shift in momentum has begun as of yesterday. We see that Oil was able to recover the 88.6% retrace level from its 2009 high. This is significant and will be more significant if price can close above this level on Sunday. However, Oil is in a multi year downtrend from its' all time high and I would not be shocked nor surprised to see it correct again around the $39-$40 range, before capitulating at a 95% to 100% retrace. 

In the here and now, Oil has good momentum on smaller times frames all the way up to the one day chart. On the daily chart, price is above the 12 exponential moving average(EMA), with resistance in the $30 range next. A daily close above the 26 EMA will serve as follow through for the bulls. A loss of the 12 EMA will put the bears back in full control in the short term. If support is broken, the next level of price to be tested is $17-$18. 

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