Unless you've been on vacation in some underground location this entire year, you've seen the wild price fluctuations in crude oil. It first began with the price spike earlier this year which saw oil get up to $130 and then the steep decline which has brought price back to the low 80s. By the way, I called that $130 top in oil. How'd I know? Because price rose directly into weekly supply.
Now, we've reached an interesting with oil. The trend is clearly down but price has hit a major level of underlying support (where I've drawn the line). What has me eyeing this activity also is that price has been consolidating on top of this area since early August (marked by the gold box). Starting on Sept. 8th, price dipped below this level is what would appear to be a continuation of the downtrend, right? But, considering that this activity is occurring on top of an area of underlying support, what if that dip below support is a shakeout of weak holders and the start of an up-move? However, if price reacts to that supply zone (highlighted in red) and continues downward, as it appears to be doing on the 4H TF, then we just continue shorting. But, with the dollar experiencing near-term weakness, it's not unreasonable to expect that we may see an attempt to rally in oil.
Now, we've reached an interesting with oil. The trend is clearly down but price has hit a major level of underlying support (where I've drawn the line). What has me eyeing this activity also is that price has been consolidating on top of this area since early August (marked by the gold box). Starting on Sept. 8th, price dipped below this level is what would appear to be a continuation of the downtrend, right? But, considering that this activity is occurring on top of an area of underlying support, what if that dip below support is a shakeout of weak holders and the start of an up-move? However, if price reacts to that supply zone (highlighted in red) and continues downward, as it appears to be doing on the 4H TF, then we just continue shorting. But, with the dollar experiencing near-term weakness, it's not unreasonable to expect that we may see an attempt to rally in oil.