The price of Crude Oil on the D1 time frame had a strong bullish trend that lasted until 8 June when the last higher top was recorded at 121.32. A closer look at the Momentum Oscillator reveals a negative divergence between point “a” and “b” when comparing the tops at 116.05 and 121.32. This could have alerted technical traders that the bulls were losing momentum.
After the higher top at 121.32, the bears gained control with the price breaking through the 15 and 34 Simple Moving Averages and the Momentum Oscillator following and changing direction to the bearish side. A possible critical support level formed when a bottom was recorded on 17 June at 106.19. The bulls then tried to take over again but a lower top formed at 110.80 on 21 June.
On 22 June the bears proved that they have the upper hand and managed to break through the critical support level at 106.19. Three possible price targets were projected from there. Attaching the Fibonacci tool to the bottom at 106.19 and dragging it to the resistance level at 110.80 at the last lower top, the following targets were calculated. The first target was estimated at 103.34 (161.8%) and this has already been triggered. The second price target was calculated at 98.73 (261.8%) and the third and final target may be expected at 91.27 (423.6%).
If the resistance level at 110.80 is broken, the above scenario is invalid and must be re-assessed. As long as the down trend stays in tact in the Crude Oil market, the outlook will remain bearish.
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