After hitting $102.21 last week, Crude oil futures for delivery in May dipped below the mark, down $1,40 for the day after hitting a low of $99.85.
Last week’s rally towards $102.21 stopped precisely on the 61.8% Fibonacci retracement on the bearish swing from $105.20 down to $97.35, raising the possibility that this recent upswing simply completed a retracement and consequently the lower high signals a deeper correction below $100.
As long positions are gradually being reduced, sellers have now reached a very strong support area. Between $99.90 and $100.30 we have a bullish trendline from March, the 50-Day Moving Average and of course the main $100.24 price pivot zone. A daily close below the support area will open the way towards $97.76, where the 100-Day Moving Average is located, with the possibility of a future lower swing low below $97.35.
Further consolidation above the $100 level can become choppy, as price will be squeezed tighter between the rising support and the resistance at $102.20.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
