[The Oil Drop] Technical Analysis and the CeasefireCrude Oil FuturesNYMEX_DL:CL1!Chartinfo1019CL1! Hello! This is WBT from the ChartInfo team. Recently, we've seen massive volatility in the crude oil (CL) market. With just 20 minutes left on the US deadline, the dramatic news of a ceasefire between the US and Iran caused sky-high oil prices to take a massive dive. A lot of people try to find the reason for the drop only after watching the news, but the truth is, the chart was already flashing strong bearish signals. Today, let's review the perspective from our last post and see how charts actually front-run the news. # Spot-On Support and Resistance at the Top of the Channel We got a successful bounce right from the key neckline around $94–$96 that I highlighted in my previous analysis, and the price rallied all the way up to the previous high of $117. What you need to pay attention to here is that the $117 price tag perfectly matched the upper resistance line of the ascending channel I drew. However, if you look at the chart in my previous post, you'll notice there isn't a line at 117. That's because I accidentally had it set to a regular chart instead of a log chart. You also need to add -4, -4.5, and -5 to the Fibonacci channel. Once you do that and switch the previous post's chart to log scale, you'll see that 117 is clearly acting as resistance. If you confirmed the buying pressure at support, the top of the channel was the technical 'top' where you should have closed your long positions and watched out for a drop. # A Strong Warning from Indicators: Bearish Divergence TF : 4H(Stochastic) TF : D(RSI) I wasn't confident it was the top just because it hit the upper channel line. While the price was pushing up to touch $117, both the RSI and Stochastic indicators were showing a clear 'Bearish Divergence'. In other words, the price looked like it was going up on the surface, but the indicators were telling us that the underlying buying momentum and energy were already drying up. Putting all these clues together, I was sure we were about to see a bearish reversal in crude oil. # The Perfect Harmony of Charts and News Then, the fundamental news of the ceasefire broke, stopping oil's upward channel dead in its tracks and triggering a massive sell-off. Of course, it's impossible to perfectly calculate the exact timing of the ceasefire or exactly how deep the short-term crash would be. But through technical analysis, I was confident that the area was a 'top' and a drop could happen at any second. Ultimately, the news of the 'dramatic ceasefire' acted as the perfect 'trigger' (catalyst) to start the crash on a chart that was already stretched to its technical limits. # The True Value of a Chart Comes From Backtesting If you use the Replay tool on TradingView to check how things played out back then, you'll see just how accurate the channels and indicator analysis drawn by the ChartInfo team really were. Charts often reflect the market sentiment way faster than the news does. If you're interested in fresh perspectives that see through the market and in-depth chart education, make sure to follow our ChartInfo team. We'll be back with an even sharper analysis in the next post!