Daily chart
Crude oil prices experienced a significant drop this morning extending earlier losses after a surprise increase in inventories of the U.S. oil. Confirmation of this data is expected by the end of the day, thus the news came as surprise for the bulls.
In fact, in the graph we can see how this fall term drilling the lower trendline acting as support now trading at 92.41 and it would be no surprise that this fall extends even to 90.63 to take a break.
4-hour chart
In 4-hour chart crude oil is breaking two term uptrend lines from an area considered as support, the last line becomes line 0/8 (blue line) which is undoubtedly a surprise for many traders. As we can see in the graph, the loss is extended to line -2/8 considered as an end zone. This being so is possible as oil tested these levels after making a base which could eventually change trend and hence initiating a buy position in this area would involve less risk and profit potential and we should place our stop loss only about 30 pips below the last line of -2/8.
1-hour chart
Similarly, in the 1-hour chart we can see that prices experienced a precipitous drop from the line 6/8 (red line) considered a major reversal zone. When it seemed that the CL could find a support on line 3/8 (green line) which came to be the basis of its trading range line again, the prices experienced a drop which is even longer. Just one hour prior to this analysis prices hit the line 0/8 (blue line) which is also considered as the last line of support and that it is withdrawing some points. We can also see that in this area there are two bottom lines of the trading band which could eventually lead to reverse movement of crude oil quotes.
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Email: antonio.inga@analytics.instaforex.com
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