Crude oil rallied back above $60 a barrel on Tuesday, now up nearly 45 percent from its March low, but one top technician is seeing signs in the charts that a pullback is due.
"I think it might be time to pump the brakes on the crude trade," technical analyst Rich Ross said Tuesday on CNBC's "Trading Nation."
Specifically, Ross is troubled by the fact that crude has "failed to hold its year-to-date high" that comes in just under $63 a barrel, which also happens to be the measured upside target from its base breakout. "That base breakout had a projected move up to $63 a barrel and that's exactly where crude went." This kind of move, said Ross, often portends to a near-term price decline.
By Ross' chart work, if oil sees a "pullback to the neckline of that double bottom," crude could fall as much as $7 a barrel, or 12 percent.
Additionally, Ross pointed out that crude oil is butting up against its 150-day moving average for the first time since August. "Crude hasn't been able to break above this level, and I expect it to run into trouble," he said. "Play for a pullback in the near term."
And it seems as though the fundamental case is equally as cautious as the technicals. Goldman Sachs published a note Tuesday morning warning that crude oil's recent rally is "premature" and suggested that prices will begin to weaken in early fall.
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