Oil Prices – Beware The 50-Day Moving Average

Oil Prices – Beware The 50-Day Moving Average by Eric Bush, CFA – Gavekal Capital Blog

WTI Crude is down down nearly 3% today and is approaching its 50-day moving average (3.6% above its 50-day moving average). As the chart below shows, the 50-day moving average has been an important signal during the free fall in oil prices since July 2014. When oil broke through the 50-day moving average in July 2014, it subsequent fell from about $103 to $47. Later, when oil again broke down through the 50-day moving average in July 2015, oil fell from roughly $59 to $40. The latest occurrence saw oil fall from $46 to $31. If oil breaks through the 50-day moving average again will that put a $20 handle oil price in play? Lastly, we also want to point out the the 200-day moving average is beginning to look like very firm overhead resistance. The 200-day moving average turned back oil in August 2014, in June 2015, October 2015 and again last month. The fact that oil has failed multiple times at this resistance level is noteworthy.

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Oil Prices