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Is this Oil Break-out Ready to fail?

As expected, the CLc1 Crude OIl future contract had some troubles to continue up after the mid-November Break-out and following Retest This was because that referred retest was very short, it was a very early-retest actually. We recommended to take a look at our last November 21st Crude Oil report, which is still available below this current report at the Energy section at the AmericaPlast NEWS Home page.

The question is how serious those current troubles are? Well, in first place the technical formation, which is shown marked with a red color square at the corresponding CLc1 daily chart, is not so negative, at least not yet.

What we do observe is that there were not highlighted candles/bars during the last 3-4 days. So the up-move did lose momentum, which is not bearish, but at the same time is not so bullish. But the 50-55 US$/barrel price area, are still being kept as a support, which is bullish, and obviously positive for the bullish cause fans.

What we don’t like, is that the marked break-out was not on volume, at least as we usually like to see. This is not a very bullish factor. So, we can say that in order to save the break-out and to continue up, we need basically to have 2 simultaneous technical events:

• The referred 55us$ Ms area ( MINOR SUPPORT) must be held.

• We need some volume increase during the next secondary break-out, in order to show the buyers commitment. Form the fundamental point of view, something really important is now happening: Several OPEC members are putting the “output increase” flag in full up-right position, because they realized that every time they reduce the oil production, prices go up and at the same time USA shale drillers use those extra profits to increase production through new drilling investments. At this pace, balancing the oil market seems to be a very unlikely event for the next 2018 year.

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