Last week, crude oil price dove to yearly lows confirming bearish sentiment across the market in support of recent sell-offs. My last article described the extremely poor performance and the impetus behind it, fundamental changes in the market. Supply increases and a stronger dollar closed the WTI spot price at $43.87, a disparity of 1.8% from the previous day. The first day of an August week brought much better news. A positive correction over 2% reversed some of the losses of last week and look to push prices to the $45 level. I call it a correction because of the heavy speculation that dragged prices to extremely oversold regions. Most indicators exhibiting momentum suggested that a short burst up was in store. The standard Relative Strength Index ended below 25 which is well below the typical oversold indicator of 30.
The chart of the WTI spot price shows the movement for Monday, August 10, 2015. At the opening. we see an initial jump in the price that represents a correction above the simple moving average that trailed into last week. From there. the breakout increased the gain above $1.00 on the day where the price stabilized and oscillated between $44.50 and $45.00. After stabilization and eventually when the market closes, I think that WTI will have established a new support as the SMA for the day levels off midway between $45.00 and $44.50.
This is part one of the analysis today. Part two will discuss the market psychology and will be posted later.