Crude Oil Key Reversal Week Makes Bulls See Red

The Commodity Specialist view - This year’s bull run, from an early Feb low, formerly held the promise of a more sustained move. But a recent negative Key Reversal Week is ignored at ones peril – these can be very good signals – and certain support points must now be closely monitored.

• BRENT CRUDE WEEKLY CHART - CONTINUATION: The Key Reversal Week was seen just ahead of the long term 50% recovery level. In common with other oil markets (Gasoil, NYMEX Light Crude, Heating Oil) initial support has come from the 23.6% retracement on the continuation chart, with break below to be the next bear sign. Note how the lower 38.2% pullback level lies near to the Feb low – the starting point for a final move sometimes ends up coinciding with the 38.2% level…
• BRENT CRUDE DAILY CHART – JUL-10: Initial support for the sell-off came from this year’s 61.8% pullback level, although more key is currently the 75.35 76.4% area, where a bull channel base projection also passes through – a break of this would be a negative momentum signal. This would come on top of a break of the 77.00 23.6% area on the Weekly chart, reinforcing a growing negative picture. Because of the key reversal week there is a better chance that s/term rallies will prove temporary, offering opportunities for sellers.

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