Crude Oil Shows Potential Signs of Topping
Crude oil has been running since early summer, but there may be signs of a top.
The first pattern on today’s chart is the “shooting star” candlestick on Tuesday. Prices climbed to their highest level of the year before reversing lower. They dropped further on Wednesday, confirming the potentially bearish reversal pattern.
Second, CL1! has been at the top of its Keltner Channel. A potential reversion down the range could imply a drop of about 10 percent.
Third, Wilder’s Relative Strength Index (RSI) is dipping from its most overbought condition since March 2022.
Fourth, Rate of Change made a lower high this week as price made a higher high. That kind of bearish divergence often precedes reversals lower.
Finally, these patterns have occurred below the 93.50 area where crude oil had a double top in October and November 2022. That may suggest its longer-term trend has failed to become truly bullish.
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Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart is the “shooting star” candlestick on Tuesday. Prices climbed to their highest level of the year before reversing lower. They dropped further on Wednesday, confirming the potentially bearish reversal pattern.
Second, CL1! has been at the top of its Keltner Channel. A potential reversion down the range could imply a drop of about 10 percent.
Third, Wilder’s Relative Strength Index (RSI) is dipping from its most overbought condition since March 2022.
Fourth, Rate of Change made a lower high this week as price made a higher high. That kind of bearish divergence often precedes reversals lower.
Finally, these patterns have occurred below the 93.50 area where crude oil had a double top in October and November 2022. That may suggest its longer-term trend has failed to become truly bullish.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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