A Quick Dual Reversal Up for Stocks and Oil

Feb 12, 2016: 11:45 AM CST

After sinking to new swing lows together, stocks and Crude Oil reversed higher off positive divergences.

Let’s pinpoint the price action and study the lesson from the dual divergences and reversal:

The unified chart above tracks the S&P 500 (@ES Futures) with Crude Oil (@CL) on the 5-min intraday chart.

Price continued a sell-swing to new lows – 1,810 in the @ES and near $26.50 for Oil (yes that low) on positive momentum divergences (green arrow).

When price tests (touches) a higher timeframe support level on lower timeframe positive divergences, it often signals a likely reversal (short-term) is more likely than additional downside price action.

In this way we always monitor momentum (an indicator) with price, particularly at key higher timeframe levels.

A surprise news announcement – OPEC may actually cut production? (way overdue) – set the stage for the price reversal and rally we’re seeing currently.

Price broke through falling moving averages and prior swing highs to emerge into a new intraday uptrend.

The strength in price we’re seeing today builds off the foundation of yesterday’s positive divergence reversal.

Afraid to Trade Premium Content and Membership

Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


2 Responses to “A Quick Dual Reversal Up for Stocks and Oil”

  1. Stocks and Crude Oil Reversed Higher Says:

    […] By Corey Rosenbloom […]

  2. Zebran Says:

    Working in Oil is very tough and we need to do really hard work to do it correctly. I don’t often do it, but whenever I do, I usually follow OctaFX broker given they have lovely service with providing us with daily market news and analysis service, it is easier to follow yet highly effective, so that all really works perfectly for me and allows me to succeed without having to face any difficulty at all and that is something I feel comfortable with.