Crude Oil Reaches Target, but No Recovery in Sight

by Justin Bennett  · 

October 26, 2018

by Justin Bennett  · 

October 26, 2018

by Justin Bennett  · 

October 26, 2018


Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

On October 7th I included U.S. crude oil in my weekly commentary for the first time. The market had just retested ascending channel resistance below 77.00 and looked ready to roll over.

Not only had sellers carved a bearish rejection candle on the weekly time frame, but the price action since February suggested that buyers were tiring.

Here’s what I wrote on October 7th:

If you’re considering buying (U.S.) crude oil, you may want to have a look at the two charts below first.

There’s no question the market is in an extended uptrend. At the start of 2016, oil was trading just below 28.00. Here we are less than two years later at 74.00.

However, every uptrend has pullbacks, and crude oil is no different. And judging by the weekly chart, I’d say the market is due for one.

At the time of that writing, oil was trading at 74.20. A few days later I alerted Daily Price Action members to a possible selling opportunity just above the 73.00 handle with a target of channel support between 66.00 and 67.00.

Fast forward to this week, and you can see the market has reached our target. And it didn’t take long either. In just eleven trading days, U.S. oil plummeted from 74.20 to a session low of 65.75 this past Tuesday.

That selling pressure has done more damage than you may realize. A look at the monthly time frame shows a massive bearish engulfing candle at a multi-year swing high.

WTI monthly bearish engulfing range

Add the signal above to the bearish structure on the daily time frame, and you have an environment that suggests more pain ahead.

That said, the 66.00/30 area is still supporting prices as I type this. And with the daily mean (10 and 20 EMAs) up around 69.00, I’d say we have a few more days of consolidation before the next leg lower materializes.

Whether buyers can force a relief rally next week is anyone’s guess. But as a first step, they will need to manage a daily close (New York 5 pm EST) above 67.20 resistance, a level I pointed out last Sunday.

Sellers, on the other hand, need to break channel support at 66.00/30 on a daily closing basis. Doing so would open up downside targets including 63.90 and perhaps even 60.00 over the coming weeks.

In summary, my bearish outlook will remain intact even if buyers take out 67.20 resistance. Everything from the daily to the monthly time frame points lower, but sellers will need to clear 66.00/30 support in order to attract a fresh round of offers next week.

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WTI daily time frame


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13  Comments

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  1. I’m beginning to think there’s an issue with the comment section of this website. You all have been dead quiet the entire week.

    Feel free to ask questions. Cheers.

      1. I try to respond to comments here on the free website, but most days I run out of time. I’ll try to be better about it.

        Thanks for commenting.

  2. Thanks Justin I have followed your analysis on GBPJPY and its really behaved as you indicated helping us new traders greatly. question. Do I take your analysis as swing trades or scalps?

  3. Hi Justin,
    In every post you suggest using BlueBerry Markets charts. Do you use that broker for placing trades or just for charts?

  4. I’m so glad to fine you on the time i almost quite Trading. Thanks so much Justin. I’ll be joining you by next Month to learn more

    1. I don’t think you know how much those things you teach means to me. I almost blow my account but your teaching help me recover. Thanks once again.

      1. Boss, what is happening to usdjpy? It closes last WK below support, only for it to start buying again. Kindly advice, for am selling it base on ur previous post abt d pair. On ur advice wld b valid for m to hold or exit. Am waiting earnestly

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