The November 14 crude oil contract traded down to a new 2014 contract low at 87.39 in the overnight session. This breakdown follows yesterday’s sell off during with the contract lost 1.49 (1.6%) settling back under the 90.00 area at 88.85.
The 87.00-88.00 area has been a solid support level dating back to June 2013. If this support is broken, 84.40-84.50 will become the next downside support for a possible low.
Moving average alignment is bearish with the 10 day moving average currently at 91.05 being primary resistance in upcoming trade. As long as the November contract trades under the 10 day average, the trend will remain down.
Hedge funds were long 295,946 crude oil contracts according to last Friday’s COT report. With the market falling to new 2014 lows, hedge fund liquidation could be a factor behind recent selling.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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