Last week, I shared a research study highlighting why Crude Oil may be setting up for a rally. So far so good. And the rally is benefitting another related energy index – the Oil Services Index (OSX).
Why is this important? Because it indicates that business activity related to Crude Oil (drilling, pumping, manufacturing, pipeline work, etc.) is ticking higher. And this typically occurs when Crude Oil prices are stabilizing or moving higher.
But there are a couple more reasons for the bounce in the Oil Services Index. And both are technical. Looking at the chart below you can see that the long-term channel trend support line came into play again this year (and it has been supportive since 1999). But what makes this level even more important is that it also marks the .618 Fibonacci retracement.
Note as well that the relative momentum is at levels that have marked past price bottoms.
Oil Services Index (OSX) Long-Term Chart
There aren’t any guarantees that this level will hold, but it’s quite clear why Crude Oil and the Oil Services Index are bouncing here. Keep an eye on these critical lines in the sand going forward. Thanks for reading.
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Author does not have a position in any mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.