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Is crude oil poised to break below last year’s lows?
Crude oil extended its short-term downtrend yesterday, dipping below the $68 level. It reacted to the stock market’s sell-off and weak economic data. This morning, oil continues to decline, reaching the $67 level.
Crude Oil Moves Closer to Its November-December Lows
The daily chart of crude oil futures shows a clear downtrend that began with the January 15 local high of $79.39. Key support is around $67, with the next one between $65 and $66, marked by the September 10 low of $65.27.
No positive signals are evident, although one could expect a rebound or at least a pause near current levels.
Weekly Chart: Crude Oil Extends Its Consolidation
Crude oil remains within a medium-term consolidation. Since September 2023, the market has been forming lower highs, which typically suggests a downside breakout. However, consolidation continues for now.
Conclusion
Crude oil remains in a downtrend, influenced by stock market uncertainty, rising gold prices, and weaker economic data, including the recent negative Atlanta Fed GDP predictor readings. But is this a good time to open a short position? I don't think so - the market is approaching strong medium-term support levels and could move sideways or rebound.
For now, my short-term outlook is neutral.
Here’s the breakdown:
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Crude oil is moving lower after last week’s rebound, with sentiment still negative amid stock market weakness, data.
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In my opinion, the short-term outlook is neutral.
Related: Market on Edge: How CPI Data Could Drive the Next Move