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Crude Oil: Game (Back) On?

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If this bounce were to fill the gap back to last Friday's close before completing the correction, then we won't be talking about a correction anymore. We'll be talking about a Double Top.

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Last Monday I pointed out that multiple patterns projected heavy resistance for June Crude Oil's at 75.25. The prior Friday's new high had tested this confluence of targets, satisfying buying pressure in droves. At least a correction (and probably only a correction) was likely.

So, how's that correction doing?

Monday's open gapped down back under prior highs, and continued dropping to test 71.00 at Thursday's lows. That sounds pretty "corrective." But a bounce since then has retraced the entire loss from last Monday's open above 74.00. And as of this morning's open, the bounce is threatening to retest the high above 75.00.

A 4-dollar pullback of a 13-dollar upleg is a good start. But it's not the end of a correction.

And if this bounce were to fill the gap back to last Friday's close before completing the correction, then we won't be talking about a correction anymore. We'll be talking about a Double Top. In that instance, a higher high would be likely before the pattern's consequences became obvious, and there would still be vulnerability to a blow-bubble. But the timing might still work for loading up the kids in the SUV - Summer Road Trip! (Not to mention a calmer resolution in sight for the current version of Middle East turmoil.)

Unfortunately, the correction premise is still operative. The pullback didn't even bother to touch prior highs before bouncing, which still reflects an "optimism premium" that is unfinished business for the correction. Meanwhile, MACD and RSI are diverging negatively into the retest of this morning's high. And the correction premise would remain intact if the gap back to last Friday's close were filled intraday, but the session were to fall back into negative territory at the close.

But that's no reason to not dream!


No positions in stocks mentioned.
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