Overview
In this analysis, we’ll take a closer look at the CL futures chart, which displays daily price action along with several technical indicators, including a Simple Moving Average (SMA), Pivot Points (traditional, automatic setting), and the Relative Strength Index (RSI).
CL Technical Analysis
Trend and Price Action
Prices were in an uptrend from February through mid-April, as indicated by the price movement above the ascending 21 SMA. However, since mid-April, there has been a reversal, and prices have begun to trend downward. The SMA line has started to flatten and curve downwards, indicating a potential shift in the medium-term trend from bullish to bearish.
SMA (21, close – 82.92)
The SMA serves as a dynamic support and resistance indicator. Currently, prices are below the SMA, confirming the bearish momentum in the short term. Only once we see price break back above the 21 SMA, can we look at the trend shifting back to bullish.
Pivot Points
The current price is slightly below the S1 (Support 1) level of 79.20, suggesting that the market is bearish in the short term. If the price remains below this level, it could seek the next support at S2 (76.46). Resistance levels are at R1 (86.17) and R2 (90.40). These levels would be relevant if the price reverses and attempts an upward move.
RSI (14, close – 36.30)
The RSI is below the midline (50) and is at 36.30, which indicates bearish momentum. However, it’s above the oversold threshold of 30, suggesting there might not be an immediate sharp downward movement unless more sellers come in.
CL Market Sentiment and Forecast
Short-term
The short-term outlook is bearish, as prices are below the SMA and key pivot level (S1). The immediate target if bearish momentum continues is around the S2 pivot point.
Medium-term
The trend appears to be turning bearish with resistance potentially capping upward movements at the SMA or R1.
Long-term
The longer-term outlook will need reevaluation once the price stabilizes or if it reaches and reacts to the S2 level.
CL Trading Strategy
Bearish Strategy
Consider short positions, targeting the S2 level, with a stop loss above the S1 pivot or SMA to limit risk.
Bullish Scenario
If the price moves above the SMA and sustains, consider reevaluating for potential long positions towards R1.
Conclusion
Currently, the Light Crude Oil Futures market is bearish in both price action and momentum. As traders, we should watch for potential stabilization or a reversal signal around support levels for new trading opportunities.
