A failed upside breakout on Tuesday by the November 14 crude oil was followed by selling in Wednesday’s session. The market traded higher for much of the early morning session by was hit with a steady wave of selling into the close with the November contract losing .43 to settle at 90.73.
Daily settle under triangle trend line support at 91.00 on Wednesday has triggered further selling overnight. The current overnight low of 88.18 is holding just above the current 2014 low for this contract at 87.85 set last January.
The 86.50-88.50 level has been a strong area of support for the November contract dating back to the June 2013. If this support area doesn’t hold, the 84.41 low from April 2013 will become the next longer term support.
Hedge funds were long approximately 320,000 futures contracts in the crude oil market according to last week’s COT report which is a pretty sizable position. With spot crude oil trading under the 90.00 for the first time in 17 months, funds are likely in liquidation mode.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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