James Dima, technical analyst at Marex Spectron, compares today’s crude market with that of 2012 and finds good reason to think a significant recovery will unfold.
In Chart 1 of F13 WTI, Dima points to the significant selloff that took place in May 2012 taking WTI down from near 105.00 to around 85.00. The RSI (lower pane) settled below 30 for a historic period of 5 weeks, recording a low of 15 on 1 June. After the RSI broke above 30 on 19 June, two weeks of sideways action followed and another price low was seen near 80.00 in late June. By 14 September, however, the market had rallied back up to the 100 area.
In Chart 2 of F19 WTI, Dima notes the similarity of the current market to 2012: A significant selloff has resulted in the RSI (middle pane) being distressed for an extended period of 21 days (compared to 28 days for 2012). He also notes how a positive MACD crossover (lower pane) for F19 WTI was confirmed yesterday (3/12/18), thus triggering a bullish signal.