The technical picture for January Crude Oil futures turned gloomy during this holiday week. After three weeks of consolidation, the inability to garner enough upside momentum to drive the market higher, finally forced counter-trend investors to give up hopes of a breakout rally, driving the market to a level not seen since June. Unless there is short-covering rally on Friday, November 29, it looks as if the market is going to close at or near its low for the week, setting up crude oil for further downside pressure next week.
Technically, the weekly chart pattern couldn’t be clearer. Key resistance remains a downtrending line from the $107.94 top, moving at a pace of $1.00 per week. This angle comes in at $94.94 this week and $93.94 the next. A Fibonacci retracement zone at $94.12 is also a resistance level. This creates potential resistance clusters at $94.12 to $94.94 and $93.94 and $94.12.
Not only did the market take out the former low at $93.17, but it also took out trend line support. This is a sign of weakness. This week, the angle comes in at $93.58. Next week at $93.83. With the angle moving away from the price action, it is going to take a tremendous shift in momentum to put the market back on the bullish side of the equation.
The weekly chart indicates there is plenty of room to the downside. If one looks to the left, one can see a pair of bottoms at $90.40 and $90.35 that could be potential downside targets. These levels are followed…