COT (Commitments of Futures Traders) CL Crude Oil Weekly Chart

The red circles show the peaks in oil price over the last year and the green circles show bottoms in oil price. The bars were extended as oil price topped out in June with WTIC at 107-108. Then the collapse begins. The beatings continued until September as oil price tried to stabilize creating a couple mini one and two week rallies before rolling over again. The last couple bars reverse again in favor of a recovery. Oil price reversed intraday on Friday and rallied into the close.

The question is if the relief rally has legs or does it reverse again like the September-October jog move that resulted in lower oil prices? The weekly candlestick chart previously posted is agreeable to a near-term bounce but wants to see another lower low in oil price say two weeks or one month out. This scenario would create another jog move for the COT chart above like September-October. The COT does not allow a conclusion to be made. A couple more bars (weeks) are needed to see if a rally in price would be sustainable or if price rolls over to the downside again.

The bars are at the lowest point on the chart so this hints that a firmer bottom may be on tap now for oil than folks realize. If a bounce occurs now in price, then the retreat back down to create universal possie d on the weekly candlestick chart occurs, oil could place a firm bottom technical-wise over the coming month before the year ends. A continued drop in oil price going forward will indicate a deflationary outcome for the global economy; an outcome that traders, analysts and economists laugh away as completely unlikely to happen. If WTIC loses 70, the deflationary outcome is likely. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

The COT chart is provided by http://www.cotpricecharts.com and annotated by Keystone.