CRUDE OIL - UPTREND FACING RESISTANCE

Crude oil price seems to be struggling to stay strong above US$70 a barrel. Every time it goes above US$70, it will start to move into a sideway trading range and fall below US$70. Price of crude oil is still above US$70 currently on NYMEX. However, the price fell US$3.00 to US$71 in the past few days. The highest was US$75 on 25 August. However, the price is still in an up trend, defined by the increasing moving averages and intermediate up trend line (See S1 on the chart below).

In the short term, momentum indicators are suggesting a weak up trend. The RSI has been stagnant while price is rising in the past few weeks. The MACD indicator is crossing below its trigger line the second time in one month. This weak up trend momentum shows strong resistance. The technical resistance level is at US$77, based on a 38.2 Fibonacci retracement level from the long term bear trend. Price of oil is probably going to test US$77 but not so soon because of the strong resistance. Support level is at US$66 and the up trend shall continue as long as the price stays above this level.


Daily NYMEX Crude Oil chart as at 27 August 2009 using NextVIEW Advisor

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.