On the daily chart below, we can see that the market has finally broke out of the 3-month long range. This has led to a big selloff as the sellers started to pile in and momentum traders joined the party. The move has overstretched a bit as we can see by the distance of the price from the blue short period moving average.
We may get a pullback towards the broken range, maybe in a classic “break and retest” style before continuing the downtrend. The latest selloff came amid fears of a banking crisis in the US and yesterday in Europe.
The market worries about tighter lending in the economy and eventually less economic activity. This is bad for demand and weighs on the oil market.
On the 4 hour chart below, we can see that as it’s been the case previously, the 4 hour moving averages were again reliable in identifying the short term trend momentum.
The sellers kept on leaning on them to enter new short positions and push the price lower. Now we may see a pullback towards the broken range support, with the 50% Fibonacci retracement level and the red long period moving average acting as resistance.
On the 1 hour chart below, we can see how strong the selling momentum was after the market broke out of the range. For the sellers there are two possible spots for new shorts. The first one is the green trendline where we can also find the 38.2% Fibonacci retracement level for confluence.
The second one is the above mentioned support of the broken range where we can also find the 50% Fibonacci level, and if it extends a little we also have the 61.8% and the blue trendline.
