Flashing Red Lights

My view:

Oil appears to have crossed a critical threshold over the past few days.

The announcement of unlimited QE3 (which is really the fourth quantitative easing since the crash), managed to boost oil prices 2%.  Then the rally failed and crude has dropped nearly 5%.

When we examine oil's price movements using technical analysis we see a clear message.

RSI has dropped from the 70 area and is barely clinging to the 50 level as shown by the green circle.

Price has lost the 200 and 20 day moving averages and is bearishly configured.

The MACD has just crossed bearishly as the purple circle shows.

Slow Stochastics also has a bearish cross as the yellow circle indicates.

The one mitigating factor is the 61.8% Fib level (not shown) at the $95 level.  It will be interesting to see if price can cling to this level.  If not, deflationary forces may trump Bernanke's reflationary attempts.