USOIL Calls for a Bottom Look Premature
01/26/2015 6:00 am EST
Paul Robinson of DailyFX.com discusses the chatter that has been surrounding Crude Oil—and with that—a lot of calls for a bottom, but he doesn’t believe we have the type of price action supportive of a bottom yet and recommends sitting tight and waiting before taking action from the long side.
- Bottom pickers look early
- We’ve seen this price action before, several times
- A bottom might not be far off, but recent activity suggest lower before higher
Lately, there has been no shortage of chatter surrounding Crude Oil, and with that, also a lot of calls for a bottom. While I agree it appears to be late in the move to initiate new short positions (-57% decline since July), I don’t believe we have the type of price action supportive of a bottom yet. The price action the past couple of weeks has been uninspiring, with nothing more than a move sideways. This lateral movement—a flag pattern, if you will, during strong trends, more often than not, acts merely as a pause before another push takes place in the direction of the prevailing trend. I’ll be sitting tight waiting for more convincing price action before taking action from the long side.
USOIL Daily: April 2014—Present
By Paul Robinson, Contributor, DailyFX.com