Crude Oil (WTI) Technical Analysis 2011.09.27

Crude Oil near a strong resistance area

Crude Oil made a local low yesterday in the $77.10 area rebounding price towards the $83.20-83.50 resistance area.

The action price in the immediate vicinity of the mentioned resistance will be the key point for the next couple of days direction: If bears will enter the market considering this is another good opportunity to sell (which it is) the targets for the bearish reversal will be set at $79.76 and $77.24.

The price retraced around 50% from the 21 – 26 September down move and this could turn out to be another reversal in the main trend direction. However, if this rally is the beginning of a longer up swing we should get a confirmation provided by the resistance zone turning into a tested support. Even if this will be the correct scenario, we are expecting a down move that will be part of a three wave (zig-zag) up move.

On the 4 hour chart the bigger picture reveals the strength of the $83.30 level. This level has been tested for several times in the near past and could still be very important for the investors.

Moreover, the stochastic oscillator is in the overbought area and, having in mind that the overall trend is bearish, this signals another selling opportunity.