Crude Oil Technicals Show Classic Reversal Pattern

From Corey Rosenbloom: On the Intraday Chart, both Crude Oil and the S&P futures set up a classic reversal pattern that triggered today.

What was it and what should we be watching now? Let’s find out:

I’m showing the 30-min intraday charts of @ES (Emini Futures) and @CL (Crude Oil Futures).

Namely we’re studying the rally up from March 27th and the beginning of April.

While not identical (stocks ran slightly ahead of Crude Oil), we see a classic five-wave progression toward key targets as negative momentum divergences appeared at the highs.

After Friday’s weakness and failed rally to a new swing high, stocks tumbled today, breaking a trendline and triggering a short-term breakdown.

Crude Oil hasn’t yet experienced a similar breakdown – and may not – but we should be closely watching the $50 level for a possible breakdown event.

The complete five-wave pattern along with divergences tip the scales (short-term) toward a reversal outcome as opposed to a trend continuity one.

However, as traders, it’s our job to balance probabilities/expectations with realities.

Either way, watch these markets and add this to your educational examples of short-term progression and correlated-market trading strategies.

The United States Oil Fund LP ETF (NYSE:USO) fell $0.07 (-0.66%) in premarket trading Tuesday. Year-to-date, USO has declined -9.98%, versus a 5.28% rise in the benchmark S&P 500 index during the same period.

USO currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #58 of 126 ETFs in the Commodity ETFs category.

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