Is This Crude Oil Rally For Real?

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Commodity Trading Research
Is This Crude Oil Rally For Real?
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• Hi, My name is Justin and Im with Commodity
  Trading Research, today were reviewing our
  recently published article

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• Is This Crude Oil Rally For Real?

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• No doubt about it, last weeks market action was
  some of the craziest weve seen in years. From
  Mondays eye-popping 1,000 point DOW downdraft to
  Wednesdays scorching 600 point rally, the equity
  markets literally went crazy.

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• But while equity markets were stealing the
  headlines, something very important happened in
  crude oil

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• West Texas Intermediate (WTI) rallied a stunning
  10 on Thursday and an additional 5 on Friday.

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• Add in the quick 6 gains seen in yesterdays
  session and youll find the commodity has rallied
  to just under 48 a barrel- a 10 price explosion
  in just three trading sessions.
• Take a look

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• As you can see, WTI is turning sharply higher in
  recent trading.After weeks of heavy losses, the
  sudden bullish price action has energy investors
  wondering if the bottom is finally in for the
  commodity.

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• Could it really be the bottom for the oil market?

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• As you know, it has been a disastrous year for
  the oil industry. When OPEC keptproduction
  steady in November 2014 to retain global market
  share, the bottom fell out of the crude.

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• The commodity fell from just under 76 a barrel
  just before OPECs infamous meeting, to just
  under 40 in the middle of last week.

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• But with WTI rallying sharply the past few days,
  investors are searching for signs the commodity
  has finally bottomed out.
• Here are the signs Im seeing

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• As you can see in the chart above, WTI fell into
  the high 30 a barrel range recently, which is
  within a stones throw of the lows set in early
  2009.

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• Also notice the Relative Strength Index (RSI) at
  the bottom of the chart failed to make a new low
  along with crude (red lines). This RSI
  divergence is a good sign selling momentum has
  run out of steam.

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• But thats just the start of it
• A number of big name crude producers are also
  showing some captivating signs.
• Take Exxon Mobil XOM for example...

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• Notice how XOM, the worlds largest oil
  producer, traded on very heavy volume the past
  week. In case youre unaware, extreme volume at
  the end of a sharp downtrend can be a sign of
  capitulation by sellers.

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• In other words, a large number of investors were
  forced out of XOM in a panic selling episode.

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• As a result, its very unlikely XOM trades lower
  than the 67.50 area set last Monday.
• Heres another producer thats reversing sharply

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• As you can see, Chevron CVX, the worlds fourth
  largest oil producer by market cap, experienced
  capitulation selling last week as well. The
  panic selloff likely forced out most of the
  remaining sellers.

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• Heres the deal
• At this point, the odds of WTI dropping below the
  2009 technical support level at the 35 area have
  become very low.

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• As a result, you should be looking for an
  opportunity to get long the oil market in coming
  sessions.
• But lets be clear

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• Well likely see some substantial profit taking
  off this latest bullish move, which will take WTI
  back to the 45 area or slightly lower in the
  near future.

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• Thats when it will make sense establishing a
  bullish position in the crude tracking commodity
  ETFs listed here.

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