There has been incredible volatility in the price movement of crude oil over the past two sessions.
On Tuesday, the October 14 contract lost over 3.00 settling under the 93.00 level. The drop on Tuesday did, however, hold above the previous 92.50 low as support which might have been part of the reason for yesterday’s recovery.
In Wednesday’s session, the October contract gapped higher on the open and rallied all the way back to previous daily highs at the 95.80-96.00 area before settling back at 95.54. With the October contract gaining 2.66 on Wednesday, nearly all the previous day’s losses were erased.
Overnight selling has dropped the October contract toward 10 day moving average support at 94.20 (94.16 current low). If this support is broken, the 92.50-92.68 weekly lows will become the next downside support. A drop under these lows is needed to keep the current downtrend intact.
There are several areas of resistance fairly close to the current market price the first being daily high over the past 3 days between 95.80-96.00 followed by the 200 day moving average at 96.45. The 40 day moving average is next currently at 97.20.
A breakout above 96.00 or below 92.50 is now needed to determine the next leg for the market and could come as soon as today following release of the weekly storage report.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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