Crude’s long-term chart should make bulls think twice before they get excited by the next dead-cat bounce. Although chances are nil that the price will fall to the $2.06-per-barrel target shown, evidence is persuasive that a drop to well below $30 is likely. For one, the most recent dead-cat bounce failed to take out the key, bull-trap peak at 62.75 recorded two years ago. And for two, the down-move in December 2014 through the 58.45 ‘midpoint support’ leaves no doubt that the bear market begun from 148 in 2008 has unfinished business. In the meantime, a rally back up to 58.45 would trip a ‘mechanical’ short that we should be prepared to exploit.
