Courtesy of Jean-Luc Saillard.
Here are some quick charts for oil. First a retracement chart anchored on the lows of last May and the highs and May 2011 (interesting, exactly one year between lows and highs).
I have circled in green the congestion points around Fibonacci lines. On Friday we bounced off the 61.8% line (traditionally the best retracement target) at around $85. That line (not a retracement line then) had acted as support back in February!
Looking at the standard set of indicators (Stochastics (15.3), MACD (12,26), RSI (15) and OBV), we can see some positive signs as both the Stochastics and RSI made turns on Friday’s price action.
As an aside, I circled in green where OBV punched through the support line on August 1 (pretty decisively actually) which was a giveaway that we should have expected a bad correction! The other indicators were pointing down already, but the volume action was very telling and confirmation!
