Crude oil's fall from 87.15 accelerated to as low as 78.87 before recovering mildly. The break of 80.53 support suggests that whole rise from 69.05 has completed with a double top reversal pattern (87.05, 87.15). Near term outlook is turned bearish and further fall should now be seen to retest 69.05 support. On the upside, above 81.70 minor resistance will turn intraday bias neutral and bring recovery. But risk will stay on the downside as long as 87.15 resistance holds.
In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
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