Categorized | DailyFX, Technicals

Crude Oil Tests Levels Below $80

Posted on 11 August 2010 by DailyFX

Crude oil fell notably on Tuesday as growth concerns reemerged. Traders will now look to the DOE inventory report set to be released on Wednesday. Gold continues to move inversely to the US Dollar.

Crude Oil (WTI) – $80.12 // -$0.13 // -0.16%

Commentary: As has been the pattern in recent sessions, crude oil followed the movements in equity markets, declining sharply in the early morning, and then recovering after the Fed policy decision and statement were released. Crude oil declined as much as $2.28 to $79.20, but settled the day $1.23, or 1.51% lower. As we have stated in the past, it will be difficult for crude oil to break above the 11-month resistance area in the mid-$80’s in the near-term, given the abundant supply picture. Up next, traders will be looking to the DOE inventory report on Wednesday for guidance. As U.S. inventories are already at 10-year highs, a bearish report would likely weigh on the commodity.

Technical Outlook: Prices are testing support at $79.38 having been rejected at resistance below $82.55, the 138.2% Fibonacci extension of the 6/28-7/6 downswing. Support is reinforced by the close proximity of the bottom of a rising channel set from the low in May, now at $77.94. A break below that exposes the congestion region around the $75.00 figure.

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This analysis is republished with permission from DailyFX, your source for daily forex market news and analysis. DailyFX is part of Forex Capital Markets.

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