Following a report from the U.S. Department of Energy yesterday, showing a decline in crude oil supplies, oil prices shot up and are now being traded at over $74.00 a barrel. However, I will illustrate below that crude oil may very well be heading for a reversal. Forex traders can take advantage of this imminent downward movement by entering short positions at an excellent entry price.
• The technical indicators that are used are the Relative Strength Index (RSI), Slow Stochastic and MACD.
• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal may take place.
• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.
• Point 3: The Relative Strength Index (RSI) indicates that the price of this commodity currently floats in the over-bought territory, signaling downward pressure.
• Point 4: The MACD indicates an impending bearish cross, which may signal a downward movement is going to occur in the near future.
Crude Oil 4-Hour Chart
