Bearish Outlook for Crude Oil - LT Support Turned Resistance
The recent sell off in crude oil broke below a rising trendline dating back to 1999. Although this line has held up as support numerous times, it was broken in 2015, which lead to a subsequent fall all the way down to $25.
After bears made a convincing move back below the tendline in October of last year, bulls rallied back, but were rejected at the newly support turned resistance bottom side of the trendline.
There is a second trendline which acted as support in January 2009 and January 2016. This second trendline is valid all the way back to 1990 and is now the bottom of a giant falling wedge. The chances of a pending global economic recession would fundamentally support a big sell off in crude and from a technical standpoint, a move back down to test the bottom of the wedge.
Sell into rallies. Bulls don't have a very convincing argument at the moment. Price should remain below $55 / trendline support, with substantial possible downside.
After bears made a convincing move back below the tendline in October of last year, bulls rallied back, but were rejected at the newly support turned resistance bottom side of the trendline.
There is a second trendline which acted as support in January 2009 and January 2016. This second trendline is valid all the way back to 1990 and is now the bottom of a giant falling wedge. The chances of a pending global economic recession would fundamentally support a big sell off in crude and from a technical standpoint, a move back down to test the bottom of the wedge.
Sell into rallies. Bulls don't have a very convincing argument at the moment. Price should remain below $55 / trendline support, with substantial possible downside.