After today’s move up CL_F should find resistance in the 65.89 to 66 area (the bottom of the cloud and horizontal resistance). So long as this area holds, we still view the move today as consolidation off of oversold levels and a back test of the broken bear flag with a continuation to a target of $62 area. The measured move of the larger Rising Wedge from the $72 levels. 

The rising wedge we mentioned last weekend broke and like this pattern type the break is quick and big. Looking at the weekly we have a clear rising channel so a test of support at some point is not out of the question.

The measured move of the rising wedge pattern puts CL_F at $62 for that trade. Looking at the daily, CL_F ended right on the 50day and shorter time frames are more than oversold. The 60min time frame has a RSI of 7! So some relief consolidation is in order. CL is now in the box from 69.50-66.5 that it bounced around in so we could see the same type of choppy consolidation between before a push below 66.50 to the eventual trade target of $62. 

That would put CL somewhere midrange of the channel so an evaluation will need to be done there to determine if a further slide to channel support is likely or a bounce back up to the top of the range. 

I believe CL is in the process of topping. There is no confirmation as of yet though but here is why I believe so. Today we have a spinning top daily candle today with bearish RSI divergence at the moment. Looking at the Ichimoku study the tenkan and kijun have flattened out and will pull price towards.

Looking at the 4hr we can more clearly see the RSI divergence and decreasing momentum as well as a rising wedge pattern – my favorite pattern.

Given the extreme Net Long positioning in WTI Crude at the moment, this adds to the extreme unwinding rising wedges typically see already as longs scramble to cover their positions further fueling the move down. 

Now the measured move of a rising wedge is just about 100% putting a target on a break down to $62. Could we grind higher? Sure but given the move in crude YTD and a lot of geopolitical risk already priced in, the risk to reward trade as I see it currently is the short side. If you want confirmation you can wait for a break of trend support to take a position and or add to it on a back test of said trend line if it happens. 

Crude is a highly manipulated commodity and nothing is for certain so use stop losses and be willing to accept the pattern is null if price and indicators are telling you so. In other words, you don’t ever want to marry oil, just date it.