Oil In "Warning" Phase

It has been a roller coaster ride for commodities prices for the past few weeks. Silver had a sharp correction and that was followed by Gold and Oil prices.

The phase chart for oil is now in “Warning” phase. Looking at the phase chart, the price of oil dipped into “Warning” phase back in Nov 2010 and Jan 2011. These dips proved to be a buying opportunity with the bulls buying strength pushing the chart into a new high.

The 50 day moving average now serves as a resistance level. Looking at the charts, the drop this time looks to be more severe then the previous two instances when the price dipped below its 50 day moving average. I will be more cautious this time and wait for the test of its 200 day moving average before jumping to any conclusion.