Early Session Short Covering Rally in Crude Oil Ends With Mid Range Close

Crude oil closed lower on Wednesday as it extended Tuesday's decline below the 10 day moving average crossing at 81.36. A short covering rally tempered early session losses and the mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 78.48 would open the door for a larger degree decline during January. If February renews this winter's rally, the 38% retracement level of the 2008 decline crossing at 84.82 is the next upside target. First resistance is the 10 day moving average crossing at 81.36. Second resistance is Monday's high crossing at 83.95. First support is the 20 day moving average crossing at 78.48. Second support is today's low crossing at 78.37.

Natural gas closed higher due to short covering on Wednesday as it consolidated some of Monday's decline. The high range close sets the stage for a steady to higher opening on Thursday. 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 today's high crossing at 5.785. Second resistance is last week's high crossing at 6.108. First support is Tuesday's low crossing at 5.354. Second support is the 50% retracement level of the December-January rally crossing at 5.314.

The U.S. Dollar closed lower on Wednesday as it extends this week's decline. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends this week's decline, the 50% retracement level of the November-December rally crossing at 76.66 is the next downside target. Closes above the 20 day moving average crossing at 77.87 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 77.69. Second resistance is the 20-day moving average crossing at 77.87. First support is today's low crossing at 76.74. Second support is the 50% retracement level of the November-December rally crossing at 76.66.

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