Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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After reaching last month’s target at 66.00, U.S. crude oil broke yet another key level during the final session of October. We’ve had our eye on the ascending channel that stretches from the February low, and last Wednesday’s close sealed the market’s fate.
That close opened the door to the next key support at 64.00. You can see how this area attracted a bid in June and again in August of this year. The level even served as a pivot between late January and February.
However, the bearish momentum following last week’s break of channel support carried the market right through the 64.00 support handle. As you’d expect, the level attracted sellers on Friday following Thursday’s 63.55 close.
So far this week, crude oil bears have picked up where they left off on Friday. Yesterday’s session came under pressure as soon as the market retested new resistance in the 64.00 region.
As the title of this post implies, as long as sellers keep price contained below 64.00 on a daily closing basis (using a New York close chart), there isn’t much in the way until the 60.00 spot. Note the many session lows here during the first half of March.
That said, don’t discount the potential for a move below 60.00 and into the 58.00 region. If you flip back to the larger weekly ascending channel I posted on October 7th, you’ll quickly notice that channel support is set to come in somewhere near 58.00.
Furthermore, the 58.00 level is the 38.2% Fibonacci retracement when measuring from the 2016 low to the current 2018 high. And if that wasn’t enough, 58.00 is also the year-to-date low (57.90 to be exact).
All signs point to lower U.S. crude oil prices over the coming weeks and months. And as long as 64.00 resistance holds up, it may be time to add to those shorts that were initiated when the market was trading above 74.00 on the 7th of October.
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