WTI Oil – Dead cat will not Bounce High.
Previous week was the week of the Oil. No other instrument on the market made such a significant movement. WTI created a fifth weekly bearish candle in the row and broke the lows from the November 2016. Such a sharp decline is obviously a sign of a bearish trend here but in the same time, every cent down increased the chances for a bullish correction.
This arrived at the end of the last week and was continued till the early morning on Monday session in Europe. Reversal was triggered by a signal from the impulse equality pattern. Drop, which lasted from the middle of April to the beginning of May was exactly the same as the current one (if we found a real bottom on Wednesday). As for now, todays candlestick looks like a shooting star and we can start being suspicious about the bullish intentions. Negative sentiment can be also supported by the place where the correction stopped. It is a mid-term trendline connecting recent lower highs (red).It should be a strong resistance for now.
If Monday will close like this, with a shooting star on D1, the correction should be over and the dark clouds should cover this chart again. We do not see any hope for the buyers at this moment. More jawboning from the OPEC officials? Been there, done that. Oversupply is a huge problem and will not be removed easily, that is why we should get used to the lower price levels for a long time.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis
This article was originally posted on FX Empire
