By Russell Glaser – Negative market sentiment from the previous week has carried over into Monday’s trading as spot crude oil prices continued to plummet until arriving at a significant support line on the daily chart.
Spot crude oil prices dropped at the opening of the Australian and Japanese trading sessions, falling to a 3-month low of $69.82. Prices fell over $1.75 on light volume. However, during the European trading session, prices rebounded to a high of $72.22.
The plummeting spot crude oil prices coincide with continuing European sovereign debt worries. Friday trading had rumors circulating of a French move to withdrawal from the European Monetary Union. This rumor has since been staunchly denied by French government officials.
A tumbling euro has allowed for a bullish run to the dollar. The EUR/USD has pulled away to a 4-year low. This is a negative for spot crude oil bulls. Spot crude oil prices typically trade in a negative correlation to dollar strength. As the dollar moves higher, crude oil prices fall.
As the price of spot crude oil falls, traders can notice the price declines stalling near the significant support level of $69.50. A breach of this support line could send spot crude oil prices lower to the next support level at $65.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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