What a great week for a crude oil bear like myself and if you've been following me you know how happy I am. The question still remains, how low can crude oil go?
Fundamentally, WTI (NYMEX:CLV14) today closed at $89.76/barrel, the lowest close since the month of October 2012 when it closed at $86.24/barrel. That's really nothing when you think that during the week of June 9 the market traded at a high of 107.68/barrel and about 4 months later on the week of October 3 (today) we closed at about $89.76/barrel. That's about $18/barrel in less than 4 months.
What I really like about this is the fact that we closed the week below $90/barrel. I would've thought that it might be some sort of psychological support-nope!
Technically, on the chart below, I have placed my favorite technical indicators. They are the 9-day Simple Moving Average (SMA, red line), the 20-day Simple Moving Average (SMA, green line), and the 50-day Simple Moving Average (SMA, blue line). I have also added the Bollinger Bands (BB's, yellow lines) and Candlesticks (red and green bars), each bar represents one day of trading on these daily charts. As a slight curve ball I have also placed a bright white arrow line pointing lower indicating a long trend of resistance that is holding even after some recent consolidation in the crude oil market.
As I predicted last week the crude oil chart below with my favorite indicators on it along with the bright white arrow resistance line tell me that we are back in a "SUPER-TREND" down as the 9-day SMA (red line) is trading below the 20-day SMA (green line) as both of these indicators point sharply lower as the crude market itself trades well below the 9-day SMA. Even though the market traded above my bright white arrow trend line, you can see that it wasn't long before the market got smashed and sent lower.
Daily December crude oil chart