Oil False Break Low (D)
Created on Wednesday, 18 March 2015 02:47
Written by Austin Galt
As I peer through the egg yolk splattered across my face, I spot what appears to be a false break low on the oil daily chart. Let’s take a look.
OIL DAILY CHART
I was wrong in calling the last low the end of the bear trend. However, I remain steadfast in my belief that price won’t be testing the 2009 low and a major low is at hand.
The lower horizontal line denotes the January 2015 low an today price looks to have made a false break low at US$42.03 with a big bullish outside reversal candle. Price has already recovered to above the horizontal line which is bullish. Powerful moves higher often follow false break lows and that is my expectation here.
The lower indicators are showing multiple bullish divergences on this low. The Relative Strength Indicator (RSI) is showing a triple bullish divergence while the Moving Average Convergence Divergence (MACD) indicator is showing a quadruple bullish divergence.
The downtrend line across the highs of December 2014 and February 2015 may provide some temporary resistance while I expect price to make a higher high above the February 2015 high at US$54.24 which is denoted by the upper horizontal line.
Summing up, I believe today’s low is the end of the bear trend and the next big bull market is now underway.