Declining energy prices, the story that dominated the last half of the 2014 in the commodity markets, has continued through the start of 2015. As you can see from the chart below, the bears have continued to dominate the momentum, and the break below short-term support (shown by the red circle) suggests that the sell-off is likely to continue. While the short-term outlook remains bearish, bullish traders will use the oversold readings of the RSI indicator to start finding candidates that could make significantly higher short-term moves. (For more, see: Find Profit With The RSI Rollercoaster .)

There are few indicators as powerful as the Relative Strength Index for spotting stocks that could make a short-term bounce higher. For those new to trading, it is not uncommon to see oversold readings (below 30) for a prolonged period while the price of the underlying assets trends lower. Most traders will wait for a move back above 30 before trading a bounce. It is important to be proactive by building a watch list of those trading in oversold territory so that one is prepared for a trend reversal. (For more, see: An Introduction To The Relative Strength Index .)

Oil Stocks Poised For A Bounce Higher

Taking a look at the chart of ENI S.P.A (E ) below, you can see that like the spot price of crude oil, it has also broken below its recent swing low, which is a technical signal of a move lower. Since the bears are in control of the short-term momentum, many traders will remain on the sidelines before trading a bounce. Notice how the RSI moved above the 30 level in December and how it corresponded with a move toward the 50-day moving average. Traders will be watching for the RSI to move above 30 to trigger another reversion toward the moving average ($38.74). (For more, see: Is Oil Posed To Move Higher? )

Petroleo Brasileiro SA

Taking a look at the chart of Petrobras (PBR ) below, you can see that it also just broke below a short-term level of support. At current levels, a bounce toward the 50-day moving average would equate to a return of 52%. While PBR’s long-term trend remains downward, there is still significant opportunity for traders willing to trade a bounce. (For more, see: Battered Stocks That Bounce Back .)

The Bottom Line

There is little question that extremely strong long-term downtrends dominate the chart of energy-related assets. However, many active traders should turn to technical indicators such as the RSI to find candidates that could benefit from a short-term move higher. Moves toward key resistance levels such as those shown in the charts above represent significant opportunity in the event of a short-term bounce. (For more, see 4 Turnaround Stocks To Watch .)