07Jul12:22 pmEST

Optical Illusions Taking Shape

Crude is reversing higher a bit here, from short-term very oversold conditions. 

The issue is whether it is worth the trouble to consider trading crude from the long side. And when we observe the updated USO daily chart, a retail proxy for crude as it is the ETF, we can see a potential "hammer" reversal candlestick being printed today.

Of course, there are a few caveats. First and foremost, we still have a few hours left of trading before today's daily candle is set in stone, and afternoon weakness throws cold water on any reversal thesis. Beyond that, many eyeballs are glued to crude.

Hence, if too many are looking for an upside reversal then perhaps the possibility of a failed "hammer" is elevated. For reference, a failed hammer can be a devastating (for bulls) pattern, with tons of trapped bottom-fishers crying in vain for help as the the candlestick is negated the following session by a sizable and abrupt move lower. 

So while an oversold bounce is certainly a possibility, the risk of the ongoing bear market in crude reasserting itself is still too high to really get behind a crude long here. 


It Just Ain't So Now They Need Confirmation

 
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