The oil market ended on a very weak note last week and technically the predictions are for further falls in oil prices this week. Each daily range has had a lower high and lower low for the past eight trading sessions so it is not surprising to see the moving averages all giving bearish signals. From here we could have a bounce of over $10.00 without altering the current down trend.The short and medium term trends are bearish while the long term trend is now sideways.
- Support : $73.14 (Friday’s low) Resistance: $85.00 (low of 22/01/08)
- Support : $72.25 (high of 19/06/07) Resistance: $84.61 (9 day moving average)
- Support : $71.80 (high of 24/05/07) Resistance: $80.55 (Friday’s high)
A stronger US Dollar contributed to the fall in the price of oil on Friday but I feel that the major factor for the current weakness is still the credit crisis and the liquidation of long positions across all asset classes. In the current current economic turmoil I still believe that the effect of a stronger US Dollar on falling prices will be greater than a weaker Dollar on any rally. With little fundamental oil news around I would warn against seeing any profit taking bounce as a trend reversal, and would suggest you avoid ‘bottom picking’ unless we see a strong technical signal or major underlying reasons for a rally, which I will naturally comment on here for you to follow – good trading – Anna
