Oil Market UpdateClive Maund support@clivemaund.com May 6th, 2015 Oil's recovery rally is believed to have run its course, and it should now roll over and drop - soon, or immediately. This rally was by fanned by fears associated with the unrest in Yemen, but it does not alter the fact that there is a huge glut against the background of a frail world economy lamed by debt. In the last update, which was bullish partly based on COTs, we said that if oil should succeed in breaking above the resistance at the upper boundary of its W or Double Bottom, a rally would ensue. That is what has happened, and oil has gone from being massively oversold at the start of the year to substantially overbought now - not bad considering that the overall trend as shown by its 200-day moving average is still down. On the 1-year chart for Light Crude we can see how, after completion of the W or Double Bottom, oil broke above the resistance at the top of the pattern and then rallied further to become substantially overbought. The steeply falling 200-day moving average now coming into play above is a stern reminder that the major trend is still down, and given how overbought it is already it is considered unlikely that the price will get as far as the 200-day moving average before it rolls over and drops again - it would only take the market starting to think more about the glut than about what is going on in Yemen.
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Clive Maund May 6th, 2015 support@clivemaund.com Clive Maund is an English technical analyst, holding a diploma from the Society of Technical Analysts, Cambridge and lives in The Lake District, Chile. Visit his subscription website at clivemaund.com .[You can subscribe here]. Clivemaund.com is dedicated to serious investors and traders in the precious metals and energy sectors. I offer my no nonsense, premium analysis to subscribers. Our project is 100% subscriber supported. We take no advertising or incentives from the companies we cover. If you are serious about making some real profits, this site is for you! Happy trading. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis. Copyright © 2003-2012 CliveMaund. All Rights Reserved. |
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