WTIC broke its "pennant" formation (ABCD) at USD57.50 two weeks ago.
This downside breakout of a consolidation pattern turned the pattern
into a reversal pattern. This means that crude oil prices are likely to
enter into a downtrend. The first stop is at the horizontal line at
USD54. we can only hope that at this strong support crude oil would
recruit sufficient buying support to launch into a more gradual uptrend.
Failure to do - accompanied by a breakdown of the USD54 support - could
send the market to re-test the January & March lows of USD44 again.
The weakness in crude oil would translate to weakness in Oil & Gas
stocks on our local bourse. Thus, we should be careful in taking large
position in these stocks.
Chart: WTIC's daily chart as at Jul 3, 2015 (Source: Stockcharts)
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