On the daily chart below, we can
see that the market has finally broke out of the 3-month long range. This has
led to a big selloff as the sellers started to pile in and momentum traders
joined the party. The move has overstretched a bit as we can see by the
distance of the price from the blue short period moving
average.
We may get a pullback towards the
broken range, maybe in a classic “break and retest” style before continuing the
downtrend. The latest selloff came amid fears of a banking crisis in the US and
yesterday in Europe.
The market worries about tighter
lending in the economy and eventually less economic activity. This is bad for
demand and weighs on the oil market.
On the 4 hour chart below, we can
see that as it’s been the case previously, the 4 hour moving averages were
again reliable in identifying the short term trend momentum.
The sellers kept on leaning on
them to enter new short positions and push the price lower. Now we may see a pullback
towards the broken range support, with the 50% Fibonacci
retracement level and the red long period moving average
acting as resistance.
On the 1 hour chart below, we can
see how strong the selling momentum was after the market broke out of the
range. For the sellers there are two possible spots for new shorts. The first
one is the green trendline where we can also find the 38.2%
Fibonacci retracement level for confluence.
The second one is the above
mentioned support of the broken range where we can also find the 50% Fibonacci
level, and if it extends a little we also have the 61.8% and the blue
trendline.
