Have Oil Prices Bottomed?
Source: http://feedproxy.google.com/~r/ContrarianProfits/~3/5KJwaoll5ao/15440Posted on Friday, April 3rd, 2009 | In Market Commentary
Oil is a hot topic. Even when I was five my mother always moaned about how much gas prices had gone up. Before I got my first car, I was already an expert at locating the cheapest gas stations. So I felt particularly betrayed that oil prices didn’t move down much further like I predicted they would here. But listen, I don’t like losing. So when I realized was wrong, I decided to look at a chart of the Light Crude Oil Contracts ($WTIC) and see what it told me.
A number of technically bullish things have happened over the past 30 days that has turned me into a fully fledged oil bull.
First of all, oil has been making higher highs and higher lows since bottoming in late December.
Second, oil has rallied above its 50 day moving average and since then that average has acted as support.
Third, just a few weeks ago the 20 day moving average crossed above the 50 day moving average. This is known as a bullish cross.
Lastly, the fact that both the RSI and Slow Stochastic have turned up after hitting 50 suggests the underlying trend is strengthening.
Listen if you’re buying for the long-term, this is a sweet spot to buy it at. If you’re a short-term technical trader, this is still a sweet spot to enter into.
If oil keeps rallying then I don’t expect any headwinds untill the $70 mark. By that time, the 200 day moving average should also be around there (marking a huge resistance point)
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