Yesterday's chart was a great chart. It opens with a gap higher with a follow-through rally. Prices consolidated for most of the day, but the rallied higher on a nice volume spike.
The 60 minute chart shows that prices consolidated between 130 and 134 between May 21 and May 31. At the beginning of June, prices formed a"V" shaped reversal pattern. Yesterday, prices made a strong advance. The next best thing prices could do would be to advance through the 134 level.
On the daily chart, notice that prices have printed two strong bars in a row, and are now through the 200 day EMA.
The above charts give hove that a relief rally may be in order. However, we're a long way before talking about a return to bullish sentiment.
Both the financial and technology ETF have moved through resistance. While the financials are still below their 200 day EMA, the technology sector has moved through the 200 day EMA.
The weekly oil chart shows that prices have been in a strong downtrend for the last 6 weeks, moving from the 105 area to the current 84.81 level -- a drop of 19%. Even if prices bottom here, there's been a fair amount of technical damage to the chart: prices are below all the EMAs, the shorter EMAs are moving lower, the MACD has given a sell signal and volatility is increasing. In addition, consider this chart of total US inventories:
We have a ton of supply on hand.
