[Chart Of The Week] About That Bottom In Crude Oil

JC Parets
March 7, 2016

There are a lot of interesting things going on in the Crude Oil market these days from both a long-term and a short-term perspective. Premium Members of Allstarcharts have wanted to be long Crude Oil since mid-February when prices were able to get back above that key $29.60 level. Our short-term upside target was near $38 and this target is being hit this week. Nice little 30% rally. But moving forward, the implications of this short-term move now change the supply and demand dynamics in Crude Oil bigger picture.

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Today we are looking at a weekly chart of Crude Oil confirming a failed breakdown below the 2008 lows. After hanging out down there for a few weeks, the price of Crude came roaring back above those former lows. The line in the sand is now very clear and simple. If you missed the short-term 30% trade over the past few weeks, it's not a big deal. Take a step back, look bigger picture and see what's going on here longer-term:

3-7-2016 5-20-23 PM cl

I'm not going to complicate this. If prices are above the 2008 lows, we can be long. If we are below the 2008 lows, we do not want to be long. It's that simple.

Target-wise, I think we see $48-50. This represents the 61.8% Fibonacci retracement of the decline since last April and also the former highs in the 4th quarter last year. We want to be taking profits there and reevaluating going forward.

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Tags: $CL_F $USO

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