After an initial morning rally, the crude pits turned bearish and there was nice downside price action. Range was a healthy $3.61 on expanding volume.
I wanted to point a couple of things out on the daily front month.
We have broken the up trend line on RSI. If you scan back across the chart, you will notice that in the previous cases where this has occurred, nice healthy corrections followed.
Notice as well, the negative divergence put in on the RSI. Is this telling us that minor C is finished? While certainly possible, I don't believe that's the case.
It appears to me that we would be missing an additional leg higher.
The intraday continuous contract shows the two ways I'm currently viewing structure.
So far, this corrective has the look and feel of a 4th wave. I have two sets of retracement fibs on the chart. The set on the left is measured from the beginning of (i) or [i], while the set on the right is from the wave (ii) or [ii] low.
Notice that the push higher this morning was turned back at the base corrective channel.
As I stated in the weekend update, we really need to see how this retrace plays out to give us a better handle on structure. I will assume a [iv] wave until proven otherwise.
We do have a divergence with today's lows, suggesting that perhaps the move off the 81.58 H needs some retrace.
Did you notice the move in the dollar today? Kind of hard to ignore in my opinion. Watch the 76.85 level. We are also at the 50% level on RSI. Price has been turned back the prior six times RSI has reached this level. Does it finally get through?
