Forex Technical Update
- The oil rally since hitting 100 in August has been an ABC correction as seen in the 4H chart.
- However, the rally has stalled under 115.50, with a couple of attempts failing to break above.
- This price action appears to be forming a double top with support at 108.45-108.50.
- Below this pivot we first open up the pivot at B, of 105-105.10.
- Then below that, we open the target of 100.00, which is just about the origin of the rally, and the August low.
- The daily chart shows a market in a declining channel, or wedge if you drew the resistance and support with a slight convergence.
- The point here is that the RSI is held below 60, and therefore the bearish momentum is still here.
- With a break below 108.50, and a push of the RSI below 40, we signal a bearish continuation.
- Then, if the RSI in the daily chart reaches 30, the market is likely heading back towards the 100 psychological support.
- Note that this opens up further bearish outlook, as it would be a successful break below the 200SMA in the daily.
- Addition confirmation to the downside can be gotten if a subsequent rally fails to break back above 108.50, or remains below the 200SMA.
- This would suggests further decline below 100. 89.60 is opened up as support for the extended bearish scenario in the longer medium term (through Q4).
Fan Yang CMT
Chief Technical Strategist