Daily Price Action
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Crude Oil Breaks Support Intraday, but Daily Close Is Key

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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On Friday I pointed out how crude oil reached our target in the 66.00 region. The bearish outlook materialized back on October 7th when oil was trading just above the 74.00 handle. You can read that post here.

The key takeaway from Friday’s commentary wasn’t that the market reached our target, but rather the idea that the selling pressure isn’t likely to end anytime soon. Of course, that does not mean we won’t see relief rallies along the way.

Let’s start with the monthly time frame. Tomorrow is the last day of October, so the massive bearish engulfing candle for the month is as good as finished at this point. And given that it developed at a multi-year swing high, it suggests there’s more pain ahead for crude oil.

Furthermore, the ascending channel I’ve highlighted several times of late has bearish implications. When a channel like this forms after a two-year rally it acts just like a rising wedge in that it hints that buyers are tiring.

Alright, so what’s the game plan?

As you can guess, I’m rather bearish on U.S. crude oil. A daily close (New York 5 pm EST) below 66.30 would open up downside targets. So far, we’ve seen a 4-hour close below it, but I’d prefer a daily close to help confirm the break.

The downside targets on my radar include 63.90 followed by 60.00. If sellers manage a daily close below 66.30, I have every reason to suspect oil is headed for the 60.00 handle over the coming days and weeks.

Alternatively, if we see oil take out this week’s (current) high at 67.97, there’s a good chance the market will revisit key resistance at 70.00. But as I mentioned above, it all hinges on how the market reacts to the 66.30 area this week.

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US crude oil daily chart

Leave a Comment:

16 comments
fabian says

Thanks for your awesome trade setups Justin!

Reply
    Justin Bennett says

    It’s my pleasure, Fabian. 🙂

    Reply
Hesham says

Hi Justin;

A general question. Does forex trading physically affect the liquidity of a currency? In other words, if 500 billion EUR USD lots were to be bought in the forex market, will USD dollars physical existence in the banks reduced? If no, does it mean that forex trading is just a bitting
and guessing on the direction of a currency rather than actual currency change? Thanks

Reply
    Justin Bennett says

    If you’re asking whether retail traders are part of the Forex interbank market, then the answer is yes.

    Reply
Aniewo francis says

Thanks so much, i still keeping my eyes on it.

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Siyabonga Mkhize says

Thanks Justin

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Yusuf Ahmad says

Weldon sir

Reply
Ken says

Hi, would you say GBP/USD is forming a double top?

Thanks

Reply
    Justin Bennett says

    Not that I can see.

    Reply
Codi says

For some reason I don’t see USO/USD available on my Forex account.

Reply
    Justin Bennett says

    It’s probably listed as WTI.

    Reply
Adi says

Great sir,
God bless you..

Reply
Francis says

Please how do i dictate and discover a strong support and resistance area on my own?

Reply
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