Possible Rebound in Crude

In my previous comments on crude, I mentioned the charts bearish nature and a potential short-term rebound coming soon.

Long-term charts are bullish as crude has been in a bull market for the past few years. But the shorter-term charts show bearishness. Is this a regular correction before more upside? Or is this short-term selloff an indication of a changing long-term trend?

Today was a bullish day with crude futures. Could this be the start of the rebound I mentioned? Let's check out the charts to find out. Check out the link below for more of my comments on crude prices.

My previous comments mentioned a short-term downtrend with oversold conditions near the 200 EMA. I also mentioned a potential rebound soon. So far, we have had a one day rebound since posting this. But we need to see more upside before a rebound can be confirmed. Here is an excerpt from my previous post.

The previous posts also mention how improving economic conditions can affect oil prices. Today, we saw economic data in the US indicating an expanding economy. An expanding economy requires energy, like oil. This almost surely added to today's bullishness. Here is an excerpt about the price mechanics of oil.

As I mentioned before, things are looking bearish for oil prices in the short-term picture. You can see below how October's momthly candle was a bearish engulfing candle. This shows you how the selling from last month was so strong that the price started near the highs of the previous month and completely sold off to undercut the previous month's very bullish green candle.

To add to the bearish thesis, the price of crude is currently on the trajectory to complete this bearish head and shoulders pattern. Also, the price is below a major Fib level. This was a strong support zone but is now resistance. If we don't see the price climb above Fibonacci resistance or that possible short-term rebound I have been talking about, then things will just look bearish.

The weekly oscillating indicators are about to flip to bearish. KDJ has already crossed into bearish territory. Weekly RSI is at the cusp of crossing into its bearish territory. And MACD is about to experience a bearish cross.

Like I said, if we don't see a rebound off of oversold conditions soon, then all of these indicators could all flip to bearish very soon.

The daily oscillators are already in bearish territory but are showing signs of oversold conditions. Sometimes, in a bull market like oil is currently in, you will see buyers stepping in when they see oversold conditions. So, watch for a potential rebound soon.

What you really want to see to be bullish towards these daily oscillators is KDJ and RSI above their 50 values and MACD above its histogram. This is what you will typically see in a strong rally.

Here is the very near-term picture with 4-hour candles. You can see its bearish downward trajectory. If the price climbs above the red resistance line, then that would confirm the very short-term rebound I have been talking about.

But I would still remain bearish in the short term until the price climbs above the blue resistance line. This would indicate that the short-term downtrend is ending or at least changing.

If the price action strongly rejects that resistance, then I will be full on short-term bearish until I see another inflection point where a possible rebound is in the cards.