oftwominds-Charles Hugh Smith: Maybe Oil Goes to $70 on its Way to $40.
A retrace that fills open gaps and kisses the 50-day moving average surprises everyone who was confident oil was heading straight down to $40/barrel.
When the conventional media ordains oil inevitably dropping to $40/barrel, I start looking for something else to happen–like oil going to $70/barrel. There are number of reasons this isn’t as farfetched as it might seem at the moment.
1. The huge gap begging to be filled on the chart of the Energy Select Sector exchange-traded fund XLE and a bunch of other energy-sector stocks and etfs. Gaps like this usually get filled sooner rather than later.
2. A bounce back to the 50-day moving average on the WTI oil index around $73 would be unsurprising. As the old saying has it, nothing goes down in a straight line, and since oil fell in a parabolic curve down, some sort of retrace to a key technical level of resistance is to be expected.
