Crude oil dropped sharply to as low as 81.85 so far and further decline would still be seen to 80.53/81.29 support zone. Note that as long as this 80.53/81.29 support zone holds, we're still treating price actions from 87.09 as consolidations in the larger rally only. Above 83.48 minor resistance will indicate that fall from 87.15 is completed and will flip intraday bias back to the upside for retesting this retesting. However, decisive break of 80.53 will argue that whole rise from 69.05 is completed with a double top reversal pattern (87.05, 87.15) and will turn outlook bearish for deeper decline
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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