- CL shows a bearish outlook in the short term.
- Bears are to be wary of the potential formation of a Bull Flag.
- The 1-2-3 reversal target is on hold for now.
Bearish Technical Outlook
Though the fundamentals are slightly bullish regarding CL, the technicals are painting a different picture for the time being, especially on the daily chart. Any traders keeping up with our CL analysis will know we still see our 1-2-3 reversal target of around $68 playing out. However, before that unfolds, there are short-term targets to be reached for the setup to remain strong.
The Dynamic Money Flow Index is still bearish and points to more downside. The pivot point has been marked in black on the chart, and we see prices attempting to test that level which is our first target of $82. That is approximately $3 away from current prices. If momentum is strong enough through the pivot point, further downside can be seen, with the next target being $76.20. We must, however, see the price move through the pivot with conviction.
If we notice price hover for a while, it would be smart to take some risk off the table as pivot points generally act as strong turning points in the market.
Potential Bull Flag Formation to be watched Closely
The bull flag on the 2-Hour chart is something bears must watch closely. Remember, as traders, we cannot marry any trade, and if we are wrong, we need to accept that and move on. If prices rally above $90, our short call may be in some hot water, as that would equate to a bullish break out on the CL flag. If you are not familiar with the flag pattern, take a look at the video we posted about the pattern here.