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Monday, February 6, 2012

Crude Oil Finding Support, Bulls Must Defend $93.50 to Avoid Major Chart Damage

It would appear that for the short term crude oil is finding support around the $95.50 a barrel area. A close below the $93.50 level seen on December 18th would confirm a double top, pivot point formation which would cause major chart damage and risk trading down into the $84 a barrel level. We do remain longer term positive on this market, however it needs to move and close over resistance at $100 to get its upside momentum into high gear. With only our monthly Trade Triangle positive, we expect we will see further market consolidation in crude oil. Long term traders should be long this market with appropriate money management stops.

Crude oil posted an inside day on Monday with a lower close. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends January's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 101.39 are needed to confirm that a short term low has been posted. First resistance is the reaction high crossing at 101.39. Second resistance is the reaction high crossing at 102.24. First support is last Thursday's low crossing at 95.44. Second support is December's low crossing at 92.95.

Check out our latest Video, Market Analysis and Forecast for the Dollar, Crude Oil, Gold, Silver, and the SP500

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