Crude oil was down significantly at the start of the year and then went into another leg of freefall. Last month, however, it held at a key support point (forming a double bottom) and has been gaining momentum ever since. While double bottom chart formations often serve as great buy signals, double tops often send the exact opposite signal. There is a fair amount of resistance from here to $40.00. A breakout through there would have many -including myself- looking for $50.00.
Of course, crude oil is down a lot from its all-time high that wasn’t too long ago but non-precious metals have been hammered much more and they are now staging a rebound. The biggie today is iron ore staging a monster rally on news that China has ambitious growth goals and that means a pickup in demand (more ghost cities anyone?).
This rally is very convincing and seems to be more than a long overdue bounce.
