Crude oil formed a Bullish Engulfing candle near strong double bottom support on August 29th. However, the bullish pattern quickly failed the following day as a Bearish Engulfing candle emerged, closing below the short-term low from two days prior. This buy failure after a bullish signal is a powerful indicator that often triggers a strong move in the opposite direction.
The Bearish Engulfing pattern from August 30th expanded after a brief pause, breaking below the crucial double bottom support on September 3rd. The downtrend continued throughout the week, pushing crude down by 7.5% to test long-term support just above USD 67.
Daily Chart of WTI Crude Oil - Bearish Engulfing candle on 30th Aug represents a Buy Failure
The overall weakness in both financial and commodity markets has deepened over the last week, with sentiment further dampened by a disappointing US jobs report on Friday, giving rise to fears of a weakening economy. The critical question now is whether crude can hold at the USD 67 support level or if a breakdown will lead to further downside pressure in the coming weeks.
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