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Notice the following on the weekly chart:
-- Prices are near their lowest level in three years
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices are below all the SMAs
BUT:
-- The MACD is very oversold and
-- The RSI is very oversold
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Notice the following on the daily chart:
-- Prices have been dropping for 5 months
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices are below all the SMAs
BUT:
-- The MACD is rising, and
-- The RSI is oversold
Bottom line: A lot of technical indicators have been calling for a turnaround for the last 3-4 weeks. But it hasn't materialized. Why? Technical indicators are signals that the possibility of something happening is increasing. A technical indicator could be oversold for months without something happening. This is where a knowledge of the fundamental market is vitally important. Oil traders have been talking relentlessly about demand destruction and a global economic slowdown for the last few months. That's the primary driving force in the oil market. I also think there is an issue of the role speculation played in the run-up to 145. And don't forget the rising dollar and its effect of commodity prices.
