Brent and Crude tend to move to together and for now Brent is still in a high and tight bull flag. Thus, I am ST bullish on Crude. One can expect that by the time the RSI turns up, crude should take the 96.33 level, an area of confluence or multiple key levels e.g. 23.6% Fibonacci retracement, channel top, and resistance. However, a rally with a falling 50-day EMA is challenging.
Key pivot point to watch is @ 96.46 (confluence). Don’t be surprise if a rally above other key levels stop here. A clean break above this area of confluence outside the channel would trigger a buy signal (or add lots).
The RSI below 50, along with a cross of the 5-day and 23-day, already flash a downtrend. The 5-day has only started to separate from the 23-day, indicating that momentum has only started to pick up. One can expect that once the RSI turns below 25, crude should retest 95.53 and then the Fib swing low @ 94.93. There isn’t much support below this, which would trigger a sell (short) signal, with massive support @ 90.14. Carefully watch the price of Brent.
Be careful holding too many lots before Weds’ inventory report. The tropical storm Don took a more westerly course, thus, key East Texas refineries could avoid the worst parts of the storm. The weak economic data and US debt deal deadlock caused a hard sell-off last week. A covering of those short positions would add fuel to a rally.
Channels and consolidations are environment that foster false breakouts, bear or bull traps. That said, if the institutional market is into a rally, then it should not have a problem regaining control of the 38.2% Fib @ 97.10, turning momentum bullish. Otherwise, we could remain range bound for the week.
Manage emotions, manage risk, live well.