We had an ‘inside day’ yesterday for oil prices which was no surprise as Friday’s range was a massive $7.41. The important feature was that it was the first day for a while that a new low was not posted. It is very common after such a steep fall that we have a period of consolidation, and indeed we are seeing such a period now and currently there are no technical signals to suggest that the current downtrend is reversing. The moving averages all remain bearish. The short and medium term trends are bearish while the long term trend is sideways.

1. Support: $75.54 (Yesterday’s low) Resistance: $85.00 (low of 22/01/08)
2. Support: $73.14 (low of 10/10/08) Resistance: $83.02 (9 day moving average)
3. Support: $72.25 (high of 19/06/07) Resistance: $80.55 (high of 10/10/08)

Summary:

The downside fall was halted yesterday as renewed confidence was injected into the stock markets on the back of Government support for the banks. Saying that, the rally was rather muted and failed even to reach the previous day’s high. I feel that the buying was more profit taking of existing short positions than fresh buying. In my view many oil traders would see any further correction as a selling opportunity, and the market would require some strong fundamental news to attract new long positions.

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