A Decline Below Important Supports. Is the Fate of the Bulls Already Decided?
Technical tips from the previous days warned of a return of the bears to the market, but such a strong bullish weakness as yesterday was not seen on the chart for a long time. Is there any chance for the buyers to improve their fortunes?
Crude Oil – Bulls’ Failure and Its Consequences
In yesterday’s Oil Trading Alert, you could read the following:
(…) How low could crude oil go in the coming day(s)?
(…) the first downside target would be the green support zone created by mid-July lows (around $73.78-$74.08). This scenario is also supported by the current position of the indicators seen on the 4-hour chart. As you can see there are no clear buy signals, which could encourage the sellers to fight for lower levels.
Looking at the chart above, we can see that the bulls have fallen even more than we originally assumed because they have not only allowed their opponents to push the price below the green support zone, but they have also closed the day below the mid-July lows.
To make matters worse (from a buyer's point of view) yesterday's drop was confirmed by a significant increase in volume, which only underscores the bear's commitment to a shaped candle.
Did anything else troubling happen? Yes - the price of crude oil has dropped below the lower border of the red declining short-term trend channel, which means that thanks to yesterday’s failure, the bulls gained an additional significant resistance.
Another negative sign? The Stochastic Oscillator negated the previously generated buy signal, giving the bears the green light to move on.
Is there any hope for the buyers?
At the moment, the only positive argument emerging from the daily chart is the maintenance of the green horizontal support line based on the peaks formed at the end of June. Is that a success? Theoretically, yes, but it's a pretty weak argument compared to all the aces the bears have in their paws.
However, if you look at the four-hour chart and today’s price action, you'll see that the buyers have been able to cling to this positive symptom and push the price of crude oil to slightly higher levels.
Does it make any difference in the short-term? I'm sorry, bulls, I won't be defending you today because despite your attempt to regain lost levels, the price not only remains well below the first Fibonacci retracement, but also below the very short-term red declining resistance line based on recent peaks.
What does that mean for me? That unless you get the price above the orange consolidation zone, the bearish resistance line and you will not be able to successfully attack (an invalidation of the earlier breakdown) the resistance zone based on the recent lows and the 38.2% Fibonacci retracement I'm in the bears’ team.
At this point it is worth noting that if the bulls fail at these levels, the bears will certainly go back on the floor and see if the buyers can sustain yesterday's low. This scenario will, in my opinion, be even more likely if buyers fail to push the price above the medium-term green rising support line shown in the weekly chart below.
Before we begin today's analysis of the stock, please keep in mind what could happen in the case of their failure:
(…) The way to the barrier of $70 or even to the mid-June lows $66.80-$67.05 will probably be open and we’ll consider going short.
Now that we know what happened to the bulls and the bears in yesterday's session, and we know what the key levels are at the moment, let's move on to the analysis of the companies.
For a good start... Yup, it's time for your wishes - especially for those of you who participated in the discussion in our community. Today I’ll focus on the company you chose. I believe that the following analysis will help in making further decisions.
What’s next for Antero Resources?
From the long-term perspective, we can notice that the previously broken 38.2% Fibonacci retracement stopped the buyers, triggering a move to the downside earlier this month. How did this price action affect the medium-term chart?
Let’s examine the weekly chart to find out.
From this perspective, we can see a few other factors that may have lured the bears into action recently (it’s worth keeping them in mind in the future):
- Firstly, the upper border of the medium-term red declining trend channel, which today serves as the nearest and very important resistance, blocking the way to higher prices.
- Secondly, the resistance zone based on the July and September lows (in terms of weekly openings)
- Thirdly, the red gap that was created at the beginning of 2023 was strong enough to keep the bulls from pushing prices higher through all of January.
The sales signals generated by both the CCI and the Stochastic Oscillator proved to be another pro-downside factor.
What do the bulls have to defend themselves with?
First of all, the medium-term support line is based on the May and October lows.
Is there anything else that could help their actions? Let's check the daily chart.
And what interests do we have here? In the short term, buyers have more allies.
In addition to the above green support line, the path to the lower levels is still protected by the 50% Fibonacci retracement and is the 200-day moving average located slightly below. Additionally, short-term indicators dropped to their oversold areas, which suggests that a rebound may be just around the corner.
Summing up, please keep in mind that yesterday's volume was very strong, raising the risk of another downswing and a test of the strength of the medium-term green support line later today or during Monday's session.
As you can see, it's worth commenting and letting us know what you need. Why? Because in Monday's analysis, it may be your chosen company that's going to be examined and factored out, which will help you make your next investment decision.
Before I analyze the next company, I would like to extend a warm greeting to Arnold M. and Ryan M. - thank you guys for sharing your comments.
And now it's time for another company from the XOI Index.
HES – Up or Down?
The first thing that catches the eye on the monthly chart is the breakdown under the lower border of the long-term green rising trend channel. Such price action, in combination with the sell signals generated by the indicators doesn’t bode well for the bulls, but let's not jump to conclusions and let's see the consequences of this decline on the medium-term chart.
From this perspective, the situation of the buyers has not only not improved but actually worsened, as the price has fallen below the medium-term blue support line based on the previous 2023 lows.
Additionally, the sell signals remain in the cards, suggesting that further deterioration and a test of the 38.2% Fibonacci retracement (based on the entire 2022-2023 upward move) may be just around the corner.
Will we see this bleak scenario play out in the coming week(s)?
The first thing that really stands out on the daily chart is the drop below the medium-term green support line, which is also the bottom of the upside-down wedge (we've marked it in blue on the weekly chart to distinguish it).
Even though the bulls have tried several times to break through this line and return above it, all attempts have failed, resulting in deepening declines and testing the support of the 50% Fibonacci retracement.
As you can see, it's managed to deter sellers and even generate a rebound in the last week, but the open price gap has proved too much of a challenge for the exhausted bulls. What did that lead to? Unfortunately (for the bulls), the price is headed south again, but let's be optimistic - the above-mentioned Fibonacci retracement is still holding.
Nevertheless, to make the analysis more complete, it's worth considering the negative scenario here. Let's zoom in on the chart and examine it once again.
From today's perspective, we can see that yesterday's session opened with another pro-bearish gap, which drove prices down. Despite this drop, the price is still trading above the recent lows (supported by the space of the green gap created in July).
Nevertheless, if the bears attack once again, it seems that the space for declines might be limited as another supporting green gap is not so far from current levels. Additionally, the buy signals generated by the indicators could encourage buyers to return to the market in the coming week.
Summing up, in my opinion, the outcome of today's session and the battle to keep the lows will determine the direction of the next move.
Finishing today's alert, I'd like to thank all of you who have read the new OTA. I hope it met your expectations and we'll meet again next week.
At the same time, I would like to encourage you again to be active in our community, where you can write about your needs. Hey, I'm here to support you in your investment decisions by shedding light on what I think is worth shining a light on. Analyzing charts and looking for correlations is my passion, so feel free to write.
Have a nice, healthy weekend to all of you and your loved ones
See you on Monday.