The recent oil dead cat bounce that started at the $45 support level has been struggling and has shown obvious weakness, but the bullish momentum is still intact. This is known by the sequential green count of TD indicator. We are now on a green 7 candle; two more green counts to complete a TD sell setup. However, there is major resistance ahead in the $60 to $63 zone. I will not discuss why I believe this is a dead cat bounce nor why I believe a bottom hasn't formed. The overhead resistance cluster comprises the following:
Price may either get rejected directly by this resistance cluster or get stuck in that zone until it is squeezed between the 30-week and 50-week moving averages into a golden cross, at which point we need to re-evaluate. However, I find it much more probable to be rejected given the weakness of the current dead cat bounce. If it is rejected, then I believe it will re-test the $45 support level.
Check my linked idea on Brent oil futures.
- Two established horizontal levels at $60 and $63.
- The 0.236 Fibonacci retracement level when drawn from the $148 high of June 2008.
- The moving averages: 30-week around $60 and 50-week around $63.
Price may either get rejected directly by this resistance cluster or get stuck in that zone until it is squeezed between the 30-week and 50-week moving averages into a golden cross, at which point we need to re-evaluate. However, I find it much more probable to be rejected given the weakness of the current dead cat bounce. If it is rejected, then I believe it will re-test the $45 support level.
Check my linked idea on Brent oil futures.
Note
It took a while of sideways action at my resistance level of $63, but oil did reach my target at $55. It found weak support I pointed to earlier between $50 and $55. Looking at the obvious weakness over the last two years, I am confident that another smaller dead cat bounce will be rejected by $55 Dmden we will fall lower to $45.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.