Is crude oil forming a bottom near its local lows from last year?
On Monday, crude oil futures reversed lower after rebounding on Friday, closing 1.01% lower. Sentiment worsened following a sell-off in stock prices, triggered by Donald Trump’s weekend comments about a possible recession due to tariff policies.
Today, oil prices are up 1.0%, moving higher yet remaining within their recent range. While this seems to be a consolidation in a downtrend, the market may be forming a bottom here.
Oil Trades Below November-December Lows
The daily chart of crude oil futures is still showing a clear downtrend that began with the January 15 local high of $79.39. However, the decline appears to be pausing near last September’s lows, which could be a positive sign for oil bulls.
The $67 level now acts as short-term resistance.
Weekly Chart: Crude Oil Flirting with Previous Lows
Crude oil remains within a medium-term consolidation. Since September 2023, the market has been forming lower highs, which typically suggests a downside breakout. However, consolidation continues for now.
Conclusion
Crude oil is still consolidating after its recent pullback. Friday’s rebound was supported by a weaker USD, but on Monday, the market moved lower again amid a stock market sell-off and overall weak sentiment.
Is this a good time to open a short position? I don't think so - the market is approaching strong medium-term support levels and could move sideways or rebound.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil continues to move sideways, consolidating after its recent declines.
- In my opinion, the short-term outlook is neutral.
The full version of today’s analysis - today’s Oil Trading Alert - is bigger than what you read above, and it includes the current Crude Oil futures contract position. I encourage you to subscribe and read the details today (with a single-time 7-day free trial). Oil Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Stock Trading Alerts.
And if you’re not yet on our free mailing list, I strongly encourage you to join it - you’ll stay up-to-date with our free analyses that will still put you ahead of 99% of investors that don’t have access to this information. Join our free oil newsletter today.
Thank you.
Paul Rejczak,
Stock Trading Strategist