From Chris Kimble: One year ago Crude Oil was falling hard, as it was down nearly 50% over the prior 12 months. How things have changed a year later, as crude is now up 50% from the lows of 2016.
Crude Oil is now entering a positive seasonal time of year, with the average gain over the next 6-months being around 10%. Will it keep pushing higher, like it has the past 12-months? Will it push higher, due to seasonal strength? The chart below looks at Crude Oil over the past 30 years.
Crude Oil has spent the majority of the past 30 years inside of the green shaded rising channel. The decline of a year ago, took Crude Oil below support and the rally over the past year, now has it testing the underside of this 30-year rising channel at (1). This is a triple test taking place at this time, that if taken out, would be VERY bullish for crude.
Rising support is being tested at (2). The risk on trade in Crude, would not want to see support give way at (2).
At this time, traders are very confident that Crude Oil prices will rise, reflecting confidence levels similar to where they stood mid 2014, right before the big decline got started. With Crude reflecting the most crowded trade in its history, it is important that support holds at (2). This crowded trade wants to push the 800 pound gorilla out of the way!
The United States Oil Fund LP ETF (NYSE:USO) was trading at $11.24 per share on Thursday morning, down $0.16 (-1.40%). Year-to-date, USO has declined -4.10%, versus a 6.97% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Kimble Charting Solutions.