2 Bearish Pins in Oil on 4 Hour Chart

Strong rally in oil seems to have exhausted its initial momentum as price is stalling at 49 level. This is confirmed by price action on 4 hour chart. On the 31^st of August the first bearish pin candle pattern formed indicating increase of bearish pressure and strong selling (might be profit taking of the longs too) and the second bearish pin formed on the 1^st of September (both around 49 level). We do not want to jump to fast conclusions, but we may have a top in the commodity and a resumption of a downtrend any time now. Selling rallies becomes the best option for trading again.

 

Our bearish bias is also confirmed by 8 hour chart where price hit 200 ema and retraced. Current support is at 44 level and we expect price to stay between 49 and 44 levels for some time. Key support is now around 39-38 levels. 43-42 levels are less important support levels, but they should hold price collapse for the time being. They coincide with 200 sma and ema on 1 and 2 hour charts.  

Intra-day resistance is at 45.50 followed by 46.00 and finally 47.00. Momentum seems to have changed and shorts are favored now over longs.  

Oil rallies but price stalls on 4 hour chart

Oil has recovered slightly from its most recent slump. On the 24^th of August the commodity hit its low for the year and rallied upwards throughout previous week. You may see three waves up on the chart, which means the security, may be due for a correction or a fall back to previous lows. In any case, the most logical thing to happen now is some consolidation at the level or a topping process and then a move down in waves. 

You may also spot 200 sma and ema on 4 hour chart and price stalling when it hit the indicator. I assume a lot of traders have taken their profits off the table when the price touched the indicators. 

Of course, another rally of 5 bucks is possible. In that case we would see 50 or 51 in US oil. I tend to think we would probably end closer to 50.50, because the level marks previous support of consolidation on the way down. 

Anyway, we need to wait and see how the market performs on Monday and Tuesday to see whether a move up or down is more likely. 

Long term trend: down

Intermediate trend: down

Short term trend: up