WTI Crude Oil Exposing the 2008-2009 Lows

WTI Crude Oil Exposing the 2008-2009 Lows

Consolidation: Since last week, WTI crude oil prices have been falling after a consolidation through February into the first week of March. The daily chart shows that after rebounding from 43.50 to about 54, price flattened.
Here are some signs that the bearish outlook is still in play even throughout the consolidation:
1) WTI crude oil found a previous support as resistance.
2) Price has held below the 200-, 100-, and for the most part even the 50-day simple moving average (SMA).
3) The RSI held below 60, which reflects maintenance of the prevailing bearish momentum.

Here is a previous video, where I talked about the imminent breakdown:
WTI Crude Oil Threatens Consolidation Support

WTI Crude Oil 4H Chart 3/18
WTI Crude Oil 4H Chart 3/17
(click to enlarge)

Breakout: As we enter the 3/18 session session price has broken the 43.50 level and is poised to continue lower. The RSI is not even in oversold territory yet. Even if it dips below 30 (into oversold territory), the fact that the prevailing trend is bearish and intact suggests there is further room to fall before this market is actually oversold.

Support Might Turn into Resistance: Now, if there is a rebound, we should watch for resistance in the 48-50 area, which represents the support of the February range consolidation.

WTI Crude Oil Monthly Chart 3/18
wti crude oil monthly chart
(click to enlarge)

As noted in the aforementioned video, the target to the downside based on the width of the broken consolidation would coincide with the lows from 2008-2009 (33.22-35). The width of the range was about 10, and 43.50-10 = 33.50.

Final Note; Demand vs. Supply
The interesting thing when looking at the monthly chart is that the current decline since 2014 matches the intensity of the decline during the first year of the global financial crisis in 2008. The main difference is that the 2008-dip was based on demand (crisis = lower demand), while the current one has to do with supply (OPEC cutting down).

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.