The crude oil market last Monday attempted a bullish breakout which failed resulting in a sharp turnaround in prices. The November 14 contract fell to a 88.18 low on Thursday, the first time spot crude oil has traded below 90.00 since April 2013.
The November contract did close Thursday’s session with a small gain but sold back off into Friday’s close settling at 89.74, down 3.80 (4%) for the week.
The inability for the market on Friday to extend Thursday’s bullish reversal is a bearish sign heading into today’s trade. The 88.18 low posted on Thursday should be retested as support early this week.
If broken, the trend will remain down with the next support being the 87.85 low from last January.
The 10 day moving average which held as resistance on Friday is at 91.75 today and is the first area of resistance followed by the 40 day average at 92.80. The 95.07 August high and last week’s 94.90 high are longer term resistance levels. A breakout above these two highs will turn the longer term trend back higher.
Friday’s Commitment of Trader’s report showed funds long 295,946 contracts, down 106 from the previous week. The fund long position remains large given that the market has been in a downtrend for the past 3 months.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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