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Hi, My name is Justin and I‘m with Commodity Trading Research, today were reviewing our recently published article…

WTI Oil Price: How Low Will It GO?

No doubt about it, bears are back in full control of the oil market...

Over the past few weeks the price of West Texas Intermediate (WTI) crude has

plunged from the high $50 a barrel range to the current price near $45.

As I mentioned here, investors are focusing on multiple bearish factors

including crashing Chinese stocks, heavy global supplies, and the looming end of

the summer driving season.

As you can see, sellers are ruling the roost. The recent downturn has the

WTIoil price down 3.9% on the week and off by a staggering 20.9% over the past

month. On a year-to-date basis the commodity is lower by 17%.

Where does the crude go from here?

Notice in the chart above that the yearly low (red line) at $42.50 a barrel isn’t far

off. Given the commodity’s bearish momentum and ugly sentiment, it’s quite likely that price point will once again be

realized.

And listen to this…

There’s a growing chorus of analysts proclaiming crude is about to crash into

the $30 a barrel range.

What’s their reasoning?

Some believe the soaring US Dollar still has plenty of room to run, which will put

continued pressure on WTI. Others suggest the oversupply issues that have

plagued the commodity since late last year, won’t alleviate any time soon.

While I won’t argue thesebearish points, WTI crude is reaching drastically oversold

levels on a short-term basis.

In fact, based on the Relative Strength Index (RSI) the last time crude was this oversold (in January 2015) it rallied a stunning 30% in a matter of weeks.

In case you’re unaware, the RSI is a very useful technical tool for measuring

overbought and oversold areas in any market.

With that said, is it time bet on a crude market rally?

Not quite…

As I mentioned earlier, it’s likely WTI crumbles to the 2015 low set in March at

$42.50. But once that price level is hit, the odds favor some degree of relief rally.

How do you capitalize on this situation?

If you’re quick you can catch the last little bit of WTI downside with the ETFs listed

here and here

But don’t fall in love with your bearish positions…

Once $42.50 a barrel is realized it’s very likely bulls stand up to challenge the

recent dominance of crude market bears- and that’s precisely when you strike on

the long side.

It’s tough to say just how much of a rally we’ll see from $42.50, but it’s quite likely

bulls make a stand at that level!

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