Oil is selling sharply following reports that weekly crude inventory rose more than expected and some U.S. producers have started pumping again. The price action on crude is extremely bearish. Why? Yesterday oil had a significant jump higher, suring 4%. Today, oil is dropping, whiping out the entire up move.
Reversals like this are extremely bearish as it shows a lack of conviction and the inability for oil to hold a strong gain. The charts are equally as bearish with oil signals telling of a fall to $35.00 per barrel. There will be brief support for a small bounce at $40.00 but ultimately, $35.00 is likely by September 2016. This is a 22% drop from current levels.
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