Crude oil triggered a continuation of the short-term decline that began for the most recent swing high $69.98 on Tuesday.
A four-day low of $65.86 was hit, with a new lower daily low and high being established. Sellers remain in control at the time of this writing, with trading continuing in the lower quarter of the day’s trading range and below the 50-Day MA, currently at $66.31. If crude closes below the 50-Day line, it will be for the first time since it was reclaimed on June 2.
50-Day Support at Risk
Today was the second test of support at the 50-Day line since the breakout in June. The first test last Wednesday ended with a bullish hammer candlestick pattern, which triggered to the upside the next day. Subsequently, the advance reversed sharply to the downside once reaching resistance at the 200-Day MA. That was also a successful test of resistance at the lower rising trend channel. In other words, that was the first pullback following the decisive decline below the lower channel line. There was also a bear flag that triggered with the breakdown as well.
Strong Level From $65.65 to $65.00
Despite the bearish implications of recent price action, there is a potentially significant support zone around a range from $65.65 to $65.00. The range was either support or resistance previously and it includes an AVWAP level (light blue) starting from the April low. During the sharp drop from the trend high four weeks ago crude oil found support and bounced from the same AVWAP line. There is also a weekly low within the same range at $65.63.
