Crude Oil Bulls Fail to Defend 10 Day, Lower Prices Likely

Crude oil closed lower on Tuesday and below initial support marked by the 10 day moving average crossing at 81.27 signaling that a short term top has likely been posted. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought and are turning bearish signaling that sideways to lower prices are possible near term.

If February extends today's decline, the 20 day moving average crossing at 78.08 is the next downside target. If February extends this winter's rally, the 38% retracement level of the 2008 decline crossing at 84.82 is the next upside target.

First resistance is Monday's high crossing at 83.95
Second resistance is the 38% retracement level of the 2008 decline crossing at 84.82

First support is today's low crossing at 80.24
Second support is the 20 day moving average crossing at 78.08

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Natural gas closed higher due to short covering on Tuesday as it consolidated some of Monday's decline. The high range close sets the stage for a steady to higher opening on Wednesday.

Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the 50% retracement level of the December-January rally crossing at 5.314 is the next downside target.

First resistance is the 20 day moving average crossing at 5.721
Second resistance is the 10 day moving average crossing at 5.723

First support is today's low crossing at 5.354
Second support is the 50% retracement level of the December-January rally crossing at 5.314

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The U.S. Dollar closed slightly higher on Tuesday as it consolidated some of Monday's decline. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If March extends Monday's decline, the 50% retracement level of the November-December rally crossing at 76.66 is the next downside target. Closes above last Friday's high crossing at 78.44 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 77.81
Second resistance is last Friday's high crossing at 78.44

First support is today's low crossing at 76.89
Second support is the 50% retracement level of the November-December rally crossing at 76.66

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