Oil has hit my first downside target

Late Jan I advised that crude oil would likely come down based on the signal from the smart money: I think there is a good chance the oil will come down first before its next leg up. Technically, the most likelihood first stop will be the support level around $58 and if the correction is more severe, it could go down as far as to its 200 DMA around $52. Well, the smart money is correct again this time. Crude oil has been in a correction mode from $64ish when I made the call to now $59ish. Actually it did test the $58 support level and bounced off a bit as I'm writing. The question is if this correction is done. It is a tricky call at the moment. Technically it has to overcome some rather strong bearish hurdles before mounting its next leg up. Its momentum indicator MACD is clearly bearish in a downtrend and has not yet shown a positive divergence. It has breached its 50 DMA, which may takes time to recover and back up again. The overall market is not in good shape for it as well. So we have to see how its price action will shape up in the weeks ahead. If it can break out and come back  again above its 50 DMA ($61ish), it will be a bullish sign to resume its uptrend. If it fails to challenge this important resistance line, then watch below. Oil may really revisit its next support around $52.


I have a short position for the oil service ETF, OIH. I'm closely watching oil and will take my profit if oil starts to move up again.