The January 15 crude oil contract closed above the 10 day moving average on Friday for only the second time since late-September. The last time this resistance was broken, the market quickly reversed back lower.
In Friday’s trade, the January contract gained .66 closing up for a second day to settle at 76.51. Last week was the first higher weekly close in the past 2 months.
There has been no follow through selling overnight suggesting last week’s breakout will fail. The 10 day moving average at 75.80 today now becomes primary support. A drop back under this average will turn the near term trend back down with the 73.22 contract low being the next level of support.
Friday’s 77.83 high is the first area of resistance this week extending up to 78.64 which was a previous daily low from October. Longer term resistance is the 40 day moving average currently at 80.85.
The funds have been liquidation existing long positions in the crude oil market as it has fallen to a new 4-year low. Friday’s Commitment of Trader’s report showed the funds long 255,363 contracts, down 21,469 from the previous week. The funds were record long 458,969 contracts last June at the market topped for the year.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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