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Oil: Initial Stage of a Potential Reversal

Monthly time frame (Continuous):

  • We have a possible reversal setup although in order to confirm that a bottom is in place Oil must break and sustain above the falling 10 dma which today stands at 43

Oil Monthly Chart
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  • From the 2008 top we can count a 3-wave down leg
  • If the wave (C) is done it should have unfolded an impulsive decline or an Ending Diagonal
  • The decline is not impulsive, instead we could make the case that Oil has completed an Ending Diagonal with a peculiar wave five overthrow
  • If the Ending Diagonal has marked a bottom then we should expect at least a retracement of the down leg from the June 2014 high (Range: 57.30-76.55)

Oil Monthly Zoom Chart
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Weekly time frame (Continuous):

  • If Oil overtakes the 0,618 retracement = 41.40 of the down leg from the October 9 lower high the odds of a bottom would substantially increase
  • Oil is now at a resistance, but so far the weekly candlestick is not suggesting a pause yet.
  • The support is located at 34.80 This support should not breached in a pullback

Oil Weekly Chart
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  • Weekly oscillators are bullish. Above all it stands out the positive divergence of the RSI. The MACD has to gain traction above the signal line in order to avoid fake signals

Oil Weekly Momentum Chart
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Daily time frame (April Contract):

  • There is a potential Double Bottom
  • If the Double Bottom measured target is fulfilled Oil would break the trend line from the May high and reclaim the 10 mma

Oil Daily Chart
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  • Daily Oscillators are bullish although a small negative divergence of the RSI is a warning of a potential pullback

Oil Daily Momentum Chart
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