Crude Oil Finally Bounces and May Reverse Short Term Downtrend

Aug 3, 2016: 12:30 PM CST

Is Crude Oil @CL Snapping its Downtrend?

After a persistent swing down from $50.00 toward (and under) $40.00 per barrel, is price finally reversing?

Let’s start with our Color Structure Grid this morning:

A downtrend is a series of lower lows and lower highs, usually defined by moving averages or trendlines.

That’s been the case on the price pathway down from $50.00 toward $40.00.

However, short-term (intraday) downtrends can’t last forever and eventually price reverses.

Momentum and today’s strong bullish swing suggests a chart reversal especially if price remains above $40.00.

Note the lengthy divergence and breakout beyond the 50 EMA (blue) on the 30-min chart along with the color-code flipping strongly green today.

Here’s a pure-price perspective of the same movement:

The downtrend has been persistent and powerful and has taken Crude Oil under the simple $40.00 target level.

Now, we may be seeing a BEAR TRAP which triggered on today’s gap-up and rally away from the sub-$40 price.

If you’re trading Crude, look to be bullish beyond $41 with a generally bullish short-term bias as long as price is above $40.50 and $40.00 per barrel.

We’ll cover this more and highlight trades along the way for our Weekly Intermarket Members (join us!).

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Corey Rosenbloom, CMT

Afraid to Trade.com

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1 Comment

One Response to “Crude Oil Finally Bounces and May Reverse Short Term Downtrend”

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