The January 15 crude oil contract spiked down to a new 5-year spot contract low of 63.72 in last Monday’s trade but held steady into Friday’s close. For the week, the contract was down only .31 settling Friday at 65.84.
The market is lower this morning in early trade retesting weekly chart support which begins at 65.00 and extends down to last Monday’s 63.72 low. If this support fails to hold, 58.00-59.00 will become the next downside support.
The 10 day moving average at 69.00 is the first area of resistance today followed by the 69.50-70.50 area where the market topped last week.
2014 has seen the steepest downtrend in crude oil prices since the 2008 collapse. In 2008, the market fell 78% over 6 months before bottoming.
Hedge funds actually added to existing long positions in the crude oil market according to Friday’s Commitment of Trader’s report. The report showed the funds long 264,996 contracts (futures only), up 11,995 from the previous week.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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