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Is this WTI’s generational low or not?

Some investors are betting that this is WTI’s generational low but I think not (unless the next QE program is about to begin).

WTI monthly chart 2008 - present

WTI monthly chart 2008 – present | Source: Tradingview.com

Notes:

  1. For two months, WTI could not close below 33.84.
  2. Candlesticks of this type with two long ‘tails’ that ultimately defeated bears are associated with turning points.
  3. Note that the last time WTI bottomed back in late 2008, the candlesticks were somewhat similar.
  4. Taking a level out of the last bottom, the next possible resistance is 39.03.

 

BUT before you go all in, do note how it is different this time.  Everything looks good from the candlesticks, price point of view until you overlay Dow Jones Industrial Average (and the Fed’s rhetoric) into the picture.

  1. The previous time WTI was this low, stocks were equally cheap but this time there is a huge divergence.
  2. Late November 2008 the Federal Reserve started QE 1 whereas it is supposed to hike rates this time.
WTI monthly chart 2008 - present overlaid with Dow Industrial

WTI monthly chart 2008 – present overlaid with Dow Industrial

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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