Let's start with the macro-view. The oil market started a rally in early 2007. Prices are now at that trend line started in early 2007. In addition, notice the following:
-- The 10 week SMA has turned lower and will probably cross the 20 week SMA within the next few weeks. This is the first time this has happened since 2006.
-- Prices are the farthest below the 20 week SMA in almost two years
On the daily chart, notice the following:
-- All the SMAs are headed lower
-- The shorter SMAs are below the longer SMAs
-- Prices are below the 20 and 50 day SMAa and are just above the 10 day SMA
-- Prices have broken through the downward sloping trend line started in mid-July
Bottom line: the market looks like it wants to either rally or consolidate sideways. Given the extreme over-sold position of the MACD and the failry oversold condition of the RSI, a rebound would not be unexpected. But this will run into the increasingly strong downward momentum from the downward sloping 10 week SMA. I think the best we can expect is some kind of short-term rally.
