Storms Put Pressure on Crude Oil Shorts, Bulls maintain The Advantage

Crude oil is trading higher as the effects of tropical storm Lee and threats of a new storm work through the gulf region. But traders see this as temporary short covering rebound as lack of confidence in the Europe financial crisis dominates commodity futures. Crude oil Stochastics and RSI are overbought and are turning bearish signaling that the corrective rally off August's low might be ending soon.

Closes below August's uptrend line crossing near 84.26 would confirm that the aforementioned correction has ended. If October renews the decline off May's high, the 75% retracement level of the 2009-2011 rally crossing at 71.73 is the next downside target. Closes above the reaction high crossing at 89.19 are needed to confirm that a short term low has been posted.

First resistance is last Thursday's high crossing at 89.90. Second resistance is the May-July downtrend line crossing near 93.51. First support is August's uptrend line crossing near 84.26. Second support is the reaction low crossing at 82.95. Crude oil pivot point for Wednesday morning is 85.27.