Oil - Looking For Low (D)
Created on Thursday, 15 January 2015 13:13
Written by Austin Galt
Let’s have another crack at trying to nail this low using the daily chart.
OIL DAILY CHART
Price has made a new low recently at $44.20. The low candle was a doji which is commonly found at both lows and highs. It can also be a continuation pattern but the trend down has not continued in this case.
The lower indicators, being the Relative Strength Indicator (RSI), Stochastic and Moving Average Convergence Divergence (MACD), are still all showing multiple bullish divergences and the indicator readings accompanying this current low were less weak still than the low on the 7th January. The Stochastic and MACD indicators are also showing a bullish bias and marginally trending up.
The Bollinger Bands show price has already moved away from the lower band and now at the middle band. Of course new lows are possible which would see price head back to the lower band but I doubt it. Why?
The Parabolic Stop and Reverse (PSAR) indicator is now bullish with price above the dots.
The move up from low was quite explosive hitting a high at $51.27 before reversing back down. The impulsive nature of the price action is another hint that the low may be in place.
The high today took out the previous swing high which is denoted by the horizontal line. So we have a higher high in place. Now all that is needed is a higher low and the bulls are in business. Price could very well be searching for that higher low right now with price already having pulled back to $46.07. Personally, I’d like to see this daily low clipped on the downside before putting in a higher low. A bit finicky.
So there are several factors pointing to the low being in place at $44.20. Now picking lows is a dangerous game but with that comes potential danger pay.