Wednesday, July 30, 2008

Another 1-2-3 reversal in the making

Now it's oils turn to track a 1-2-3 reversal. This time the trend will be down however. The S&P confirmed the trend reversal today BTW by closing above the intial reaction.

Oil should now test the highs. I have my doubts as to whether it will be able to push above the 50 DMA before rolling over again though. Notice the 3 day RSI is already close to pushing into overbought. In a declining trend overbought levels get sold fairly quickly. We'll just have to see how this one plays out. Needless to say I'm not ready to buy oil yet.