From more than 100 in June, to a January low of 43.58, it's tempting to think oil has bottomed and it's time to buy. The February rally off the low has pushed the price right to the descending trendline though, an area of potential resistance.
The price reached 54.24 on February 3, then pulled back to 47.36 and has tried to rally again, this time only reaching 53.99. The slightly lower high isn't usually a major cause for concern, yet given the dominant downtrend, it adds to the evidence for further declines.
The 4-hour chart shows a consolidation near this lower high, ranging between 53.99 and 51.67. The decline below 51.67 on February 10 signals this small rally may be over. That level, or close to it, presents a shorting opportunity, with a stop loss above 54.24.
Figure 1. March Light Sweet Crude Futures - 4-Hour Chart
A conservative target on the trade is 48, near the recent swing low. The next target is 44, just above the major low. Projections based on the declining trend channel put a longer term target between 40 and 36, should the downtrend continue.
A rally back above 54.24 indicates that, at least for the short-term, the move higher is continuing. The strength of that move will determine whether longs are considered, and will be addressed at a later date if that scenario develops.