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Both Crude Oil Contracts Testing Key Levels

Last updated 8/17/2012 7:40 AM EST (GMT -5) 0 Comments - Add your comment

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Fawad Razaqzada

Technical Analyst, GFT

Follow @FawadR_GFT

We looked at the daily chart of Brent on Wednesday and pointed out the possibility of a sharp pullback. I was concerned about the recent parabolic-like rally and a couple of doji candles showing indecision (by the way you can read that article by clicking here ). Now price rallied strongly after I published that report, only for the sellers to show up right at $116.70. From there we have seen an equally strong move lower. This $116.70 level was previously support, so this sharp rejection is hardly surprising.  But there is a strong support level around $113 and Brent has managed to hold above this level for a number of days, which is bullish. As well as it being the former resistance level, $113 also marks the 61.8% Fibonacci level of the March-June sell-off. The 78.6% level of this retracement, should we get there, ties in with the psychologically-important and prior resistance of $120.

Meanwhile WTI is also testing a key resistance level at $95.50 which was previously support and resistance as shown by the arrows. Yesterday, price pierced through this level to the upside but was immediately rejected, leading to a small pull back. It is now testing support at $95.00. Other support levels to watch on WTI are at $94.00 and $92.50. Resistance beyond $95.50 may come in at $97.80 which marks the 61.8% Fibonacci level of the AB down swing.  The 200-day average, which is currently sitting around $96.75, may also offer some resistance.

For intraday analysis and trade ideas, follow me on twitter @FawadR_GFT

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About The Author

Fawad joined GFT as a technical analyst in 2010 and has since focused on timely market commentary and research for GFT with an emphasis on technical analysis. He achieved his CISI Level 3 Certificate in Investments (Derivatives – Retail) in early 2011.