After a week full of bad news for the energy complex and a weak jobs number on Friday, the selloff in crude has begun to lose some steam. The July crude contract currently sits at 47.41, only down .25 from Friday’s settlement.  While still stuck in a downward channel dating back to 5/25, the market has put in a higher low for the time being.  Before the bulls get too excited, we have seen this a few times already within the context of the this downtrend.  After the initial selloff from the 5/25 highs, we found a base slightly above 48.00. The market then recovered, sold off a bit (While putting in a higher low), recovered a bit again, made another lower low within the frame of the recovery, only to make a new low for the move shortly thereafter. This time, the market bottomed out at 47.73 before proceeding to put in a very similar pattern of a higher low, followed by a lower low within the frame of the recovery, only to put in a new low for the move at 46.74 shortly thereafter. So going back to the higher low, it will be interesting to see if this portion of the chart will develop in a similar manner. The lower we go, the more value traders will begin to see in not only trades, but in longer term investments. Sure the news has not been great, and as a result the price has dropped a decent amount in relatively short order. However, I think it is a good idea to start devising strategies to take advantage of prices here or certainly at lower levels. I would not be surprised to see this market trade down a few more dollars to the $45 level, but I would be surprised to see a big, sustained move beyond that level.

 

Jul ’17 Crude Light 120 Min Chart