July crude oil was lower overnight due to profit taking as it consolidates some of this spring's rally. Stochastics and the RSI are overbought, diverging and are turning bearish signaling that a short term top is in or is near.
It seems that most day traders are looking for any excuse to buy the dips and continue going long this market. But with commercials increasing their short position's at a sharp pace the crude oil rally may not be sustainable.
We will continue to watch the SP 500 as it struggles to stay above key trading levels [876-880] and the U.S. Dollar as it appears to be responding to geo-political events. Both are the biggest threats to crude oil bulls at this point.
At this point it looks like natural gas will test it's lows of 3.25 and will continue to try to drag crude oil down with it.
Closes below the 20 day moving average crossing at 58.29 are needed to confirm that a short term top has been posted. If crude oil could extend this spring's rally, the 25% retracement of the 2008-2009 decline crossing at 68.49 is the next upside target.
Tuesday's pivot point, our line in the sand is 61.42
1st resistance is 61.95
2nd resistance is 62.70
3rd resistance is 63.23
1st support is 60.67
2nd support is 60.14
3rd support is 59.39
The weekly pivot is 60.23
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The June Dollar was higher overnight due to short covering as it consolidated above the 62% retracement level of the July-March rally crossing at 79.80. Stochastics and the RSI are oversold but remain neutral to bearish signaling that additional weakness is possible near term.
If June extends the decline off April's high, the 62% retracement level of the aforementioned rally crossing at 79.80 is the next downside target. Closes above the 20 day moving average crossing at 82.70 would confirm that a short term low has been posted.
First resistance is the 10 day moving average crossing at 81.56
Second resistance is the 20 day moving average crossing at 82.70
First support is last Friday's low crossing at 79.90
Second support is the 62% retracement level crossing at 79.80
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The SP 500 traded lower Monday evening and it appears most traders are looking for this market to go lower. Volume is generally low on these "1st day after the holiday" days, but we could creep right through the critical levels, 874-880. The U.S. Dollar looks to be in charge as it is reacting to news out of North Korea.
Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 875.40 would confirm that a short term top has been posted. If traders take this market through the 874 support level there is little resistance keeping us from trading the 820 area.
Tuesday's pivot point, our line in the sand is 888
1st resistance is 893.50
2nd resistance is 902
1st support is 880
2nd support is 874
The weekly pivot point is 894.25
1st weekly resistance is 912.25
1st weekly support is 865.50
The June S&P 500 Index was down 7.60 points. at 877.30 as of 5:57 AM CST. Overnight action sets the stage for a lower opening by the June S&P 500 index when the day session begins later this morning.
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