February crude oil futures sold off sharply the week-ending January 2. The selling pressure drove the market through a December bottom at $96.52, turning the main trend to down on the daily chart.
The selling pressure started last week at $100.75 when the market found resistance at a Fibonacci retracement level at $100.83. It then accelerated to the downside when the 50% level failed at $99.16. This put the market in a position to break further. The retracement zone at $99.16 to $100.75 was based on the break from the August top at $106.22 to the November bottom at $92.10.
A new short-term range has developed between $92.10 and $100.75. This creates a new retracement zone at $96.43 to $95.40. This is the next likely downside target. If the trend is doing to turn on the weekly chart, it will start inside this zone. If fresh buyers fail to show then the clearly established long-term downtrend should continue with another test of $92.10 a strong possibility.
Guiding the market lower are the downtrending angles from the $106.22 top. Above the price action, acting like resistance is an angle at $101.72 this week and $101.47 next week. Breaking below an angle at $97.22 this week and $96.72 the week-ending January 10 will put the market in an even weaker position.
Crude oil opened in a weak position this week when it failed to hold a steep uptrending angle. This triggered the break into another angle at $97.10. A close under this angle will put the market…