Oil Unable to Follow Through to the Upside
By Mike Paulenoff, www.MPTrader.com
Fits of volatility can come from 1) energy...2) financials...3) Gov't data... 4) geopolitics... take your pick, but just hope that we are not positioned opposite of the directional spike! Let's have a look at crude oil...
I do not know what to make of the enclosed hourly chart of oil, which shows this morning's spike from $122.10 to $128.60 (+5%) in a matter of minutes! The really interesting aspect of the price action, through, is its inability to follow through to the upside after hurdling yesterday's spike high at $127.89.
Instead, Sept crude has backed of $2, which leaves behind a bull trap of sorts and also leaves the price structure still stuck in its week-long range between $127.50-$128.00 and $122.50-$120.00. Bottom line: the oil bulls see a base developing, whereas the bears see a recovery rally that is struggling. I will watch, and react accordingly via the US Oil Trust (AMEX: USO) ETF.