The price of crude oil has seen up and down trading today with resistance at the open leaning against a technical target and the subsequent move lower also finding traders leaning against a technical target – this time on the downside.
What were those levels?
Crude oil started the day higher, testing its 200-hour moving average near $91.85. Sellers leaned against that level as risk can be defined and limited against the levels. Traders love levels where they can “risk a little to potentially make more than a little”. That is what they did and that stalle helped to push the price lower.
The rotatation lower saw the price move back below the $90, but when the price approached a swing area low target, buyers entered. The decline stalled at $89.11, leaving the important swing support at $88.72 intact.
That failure to break support gave the buyers another opportunity to regroup. The subsequent rebound has taken the price back above its 100-hour moving average at $90.77, helping to neutralize the shorter-term technical bias.
Middle East tensions add support
Reports of a fire at a Saudi Aramco facility have added to supply concerns. Yemen’s Houthis claimed missile and drone attacks on Aramco sites, although Saudi authorities and Aramco had not immediately confirmed the cause of the fire. That distinction matters when assessing the headline and its potential impact on supply.
What would increase the bullish bias?
Getting above the 100-hour moving average is a step forward for buyers. However, with the price still below the 200-hour moving average at $91.85, they have more work to do.
Trading between those two moving averages puts the market in a more neutral position. Buyers have repaired some of the downside damage, but sellers still have a level above where they can lean.
A move above—and sustained trading above—$91.85 would shift the bias more to the upside. The next resistance area comes in between $92.29 and $93.48, with the upper boundary marking last Thursday’s high. Getting above that high would give buyers even more control and open the door for another push higher.
What would put sellers back in control?
On the downside, the 100-hour moving average at $90.77 becomes the first barometer. Buyers would like to see that broken resistance hold as support.
A move back below it would weaken the recovery and bring today’s $89.11 low back into focus. Below that, $88.72 remains the key support level. The chart shows repeated reactions around that price, making it an increasingly important dividing line for buyers and sellers.
Key technical levels
- $93.48: Last Thursday’s high and the upper boundary of the swing resistance area.
- $92.29: Lower boundary of that resistance area.
- $91.85: 200-hour moving average; the next hurdle for buyers.
- $90.77: 100-hour moving average; initial support after the rebound.
- $89.11: Today’s low.
- $88.72: Key swing support.
Trader Education
For newer traders, the lesson is that a headline can provide the shove, while the technical levels help measure whether that move is gaining traction. Stay above $90.77 and buyers keep their recovery alive. Get above $91.85 and the bullish case strengthens. Fall back below $90.77 and sellers get another opportunity to test the downside. Those levels help you define your risk, limit your risk and accept your risk, by leaning against them.
This article was written by Greg Michalowski at investinglive.com.