The market is beginning to just settle down again following renewed weakness over the past couple of days. The price hit a new multi-year low again yesterday with a move to $1.0350 however the selling pressure could not be sustained and a mild rebound was seen into the close which has also continued slightly today. However there is once more nothing to suggest that this will be the beginning of a significant rally and I continue to see these minor bounces as a chance to sell. The momentum indicators remain bearishly configured and also with downside potential considering the RSI is only in the low 30s. The hourly chart shows that moves to unwind the momentum continue to flounder with the hourly RSI failing around 60 and the MACD lines failing around neutral. The resistance at $1.0480 is taking on more importance now, as yet another lower high. I expect renewed pressure on $1.0350 before further moves towards parity. $1.0480/$1.0540 is a good sell zone in the event of a bigger rally.
The bear pressure is growing. I have been using $1.2330 as a gauge of support and yesterday this level was breached. Despite the move being only brief, it shows that the selling pressure is beginning to mount and with a series of lower highs and lower lows, a retreat towards the lower part of the range at $1.2080 should not be ruled out with further dollar strength. Daily momentum is not yet overly negative, however, the configuration on the hourly studies is set up to suggest that rallies are increasingly a chance to sell. Resistance at $1.2427 now protects the band $1.2515/$1.2550. A close below $1.2300 would really begin to heap on the pressure.
With the strength of the momentum and the bulls still in control, the run higher can allow itself these momentary pauses for breath. The bulls looked to reassert themselves yesterday following a couple of days of correction. However the move could not sustain for a breach to a new high. The early dip back again today suggests this is becoming another consolidation phase. This is where we must look out for the next buy signal as the trend continues to be your friend. The hourly chart shows a short term range is forming with the initial support at 116.52 above the 116.12 breakout. Yesterday’s high at 118.25 forms initial resistance under the 118.65 high. Coming increasingly close to Christmas the volume levels are beginning to drop away (certainly from their levels during November) and perhaps the impetus will be subdued a touch. However there is little to suggest yet that the next break will not again be to the upside.
As we move closer to the Christmas period, the market is beginning to take on more of a consolidation look to it as a small $20 range is forming between the key low at $1122.30 and resistance at $1142.30. It is interesting to see that the consolidation continues to come around the support of the 76.4% Fibonacci retracement of $1047/$1375 at $1124.50. However this is merely a pause for breath within the bear trend which continues to provide the major basis of resistance in the medium term, today at $1147. Momentum is still negatively configured and I continue to see the next move as a continuation of the trend lower. There is initial support of yesterday’s low at $1125.20.
The oil bulls have been battling for the past few days to regain the ascendency, and with the decisive close back above the resistance band $51.93/$52.40 the positive outlook is developing once more. The momentum indicators are in strong configuration with the Stochastics and RSI both turning higher again above 60. The hourly chart shows the move above $52.40 and with the new contract today, the market is now above $53.40 resistance to open the latest key high at $54.50. The hourly MACD lines have turned higher from around neutral and the configuration on the hourly RSI is positive. Leaving the support at $52.40 means there is a series of higher lows at $51.50 above $50.50 and the key low at $49.95. Corrections are being bought into and there is an increasingly positive near term bias forming.