Crude oil technical analysis

Oil has reversed the reversal. If there is someone out there surviving while trading 100 lots in oil futures over the past month, I'd like to shake his or her hand. Crude is down 5.7% today, or $2.84 to $48.13.

It's a violent market that breaks one way only to break even harder in the other direction the next day. I have been pushing for shorts and oil is at a two week low but it hasn't been easy. Yesterday's rally marked a bullish outside day and that gave shorts a reason to worry.

But with a technical reversal or an engulfing candle, it's not just about the pattern of formation. The magnitude is at least as important. That's why today's drop is so significant. The last two candles are two of the largest since the start of the month.

That said, tomorrow is rig count data. This market has been hyper-prone to moves and reversals on news so be careful. It's also month-end and that can't be ruled out as a factor.

The next level of technical support is the Feb 5 low of $47.36 per barrel. On the upside, the 55-day moving average remains a barrier.