Oil Drops Like a Rock

For the past 12 months, Oil was doing really good. Buyers managed to recover from the heavy losses and the price almost doubled. During that year, we had many corrections and most of them were very flat, showing us a bullish dominance. Almost all of them, except two: the one in February and the one that we are seeing now.

Three days were enough to wipe out the gains from almost two months of trading. Oil started a bearish reversal and we have to admit that they started it with a big bang! The first and the most important target was already reached today. The price declined to the area around the 66 USD, where we had a combination of three important supports. First two are dynamic uptrend lines, mid-term and long-term one (black). The third one is the horizontal one, used as a resistance in January and March (orange). The first reaction here is positive because the price is drawing the long tail on the daily candle so we can assume that the demand tries to regain the control on the market.

The mid-term future of the WTI Oil depends from today’s candle. A hammer candle, so a pattern with a price closing somewhere close to the opening, will be a strong buy signal. A daily candle closing below the support, so near daily lows, will do the opposite: trigger a strong sell signal.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis