Chance for Bearish Continuation is Increasing

The chance for a continuation of the bear trend is increasing. Recent failed attempts to breakout above the 200-Day MA, the more significant trend indicator, have failed and we’re now seeing increasing signs of weakness. The week ends tomorrow and unless the bulls take back control crude oil is set to end the week with a bearish candlestick pattern.

A bear trend continuation signal will be given on a drop below last week’s low of 76.83. Last month’s low of 76.86 was already busted once earlier this month. A drop below that low will provide a second monthly bearish signal. The next lower target zone includes the 61.8% Fibonacci retracement at 75.49, along with the bottom trend channel line. Further down is the 78.6% retracement at 72.11.

Rallies Will Again Deal with Solid Resistance Zone

On the upside, a rally above today’s high of 79.14 sets up another test of trendlines and moving average as resistance. One thing to consider is that when multiple lines identify a similar price zone, it becomes more significant. For crude oil, that significance may be experienced as strong resistance leading to a bearish continuation, or a key pivot where an upside breakout may trigger strong momentum.

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