We saw another huge range yesterday of over $6 in oil prices, which engulfed the previous days session. Aftr breaking through Monday’s high, prices rose to challenge Fridays high, and there ran out of energy to fall back below Monday’s low, which is a bearish signal. As I suggested, this behaviour was to be expected as we identify that the down trend is intact and would expect rallies to be sold into by oil traders. The next important level is Friday’s low of $73.14 which is also the lowest level of this year so far. The short and medium term trends are bearish while the long term trend is sideways.

1. Support : $73.14 (low of 10/10/08) Resistance: $85.00 (low of 22/01/08)
2. Support : $72.25 (high of 19/06/07) Resistance: $80.80 (9 day moving average)
3. Support : $71.80 (high of 24/05/07) Resistance: $80.74 (Yesterday’s high)

Summary of oil prices:

Early strength yesterday was found from sympathy with the rise in the worlds stock markets. Whether this was just a continuation of the recent profit taking and just a correction to the down move, or a major turnaround would be tested at last Friday’s high, and the answer was made clear by a fall of over six dollars. Technical traders would be looking to sell in to rallies and from a fundamental point of view we are still lacking demand. The weekly DOE Stats are delayed until tomorrow due to Monday’s Columbus Day holiday in the US, so we will have to wait until then for any confirming indications.

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