U.S. oil prices fell 1.42% to 84.60 early in NY as falling demand is forcing oil producers to drop prices. Since topping out at $107.68 early in June, prices have collapsed. After the clean break of the $90 handle, price appears to have some tentative support around the $83.50 zone.
The weekly chart above shows that the key $84.72 level identifies a potential point D for a bullish Gartley pattern. Since the fundamentals still support further downside, waiting for confirmation by the end of the week will be important. If price is unable to recapture that level, further downside may target the $80 handle. It is around that area, we anticipate a price floor to form.
If price is able to catch a bid this week, a close above the $87.25 level, could see momentum target $89.75. Critical support remains the $80.00 zone with $75.00 being the next support level.
The trade: Sell US Oil at 85.50 with a stop loss at 83.50 and a take profit at 86.50 The Risk/Reward Ratio is 1:2
Edward J. Moya
WorldWideMarkets Online Trading