Time to update our traders about the situation on WTI oil, where in our opinion, the correction that started in December is coming to an end. Buyers had a good run but it looks like it is time for them to exit the market and look for proper trading occasions elsewhere.
The bullish correction started in the second half of December and the price managed to climb almost 14 USD higher. That is definitely a nice score and buyers can be happy with themselves. Time to close the door and say goodbye I guess. What we see on the chart is a Head and Shoulders pattern (yellow) where we can see the top of the bullish correction. This formation has now been completed (giving out a sell signal) as on Thursday, we broke the neckline of this pattern (blue). On Friday, the price tested the broken support as a closest resistance, which gave clear confirmation of bearish strength.
You may be right in remaining unconvinced as of yet. If we want to talk about a clear bearish situation, we’ve got one more support to break. That support is the purple line connecting recent important higher lows. Closing the day below that line would provide a proper sell signal with a potential target at December’s lows. So basically, we are talking about another decline here and a trade with a marvelous risk to reward ratio.