Crude oil suffered the biggest daily drop in more than a year yesterday despite stronger US labor market manufacturing and jobless claims lower and higher than expected ISM manufacturing number. Word on the street is that the decline was caused by narrowing the fears arising from stronger economic figures, but this statement really does not fly when you know that prices were actually rallying in the last two weeks after the Fed announced a surprise cone in its December FOMC meeting.
Therefore, it is difficult to pin down because of fears when actual cone tapered did not send the price of crude lower. Instead, we should point the finger at the bearish sentiment underlying crude that have been identified yesterday, after a bullish response luster missing after the API numbers were announced. It is likely that the bear lurking in the shadows took advantage of declining stocks and sell aggressively. Looking at different major pairs USD yesterday (see AUD / USD, EUR / USD and GBP / USD), there are indications that the appropriate bargaining has not returned from vacation, and it is not surprising that the bearish momentum was so strong, although the bears were running on nothing but their own sense because there was not enough volume to cushion the decline.
Weekly Chart
With this in mind, even if the price manages to touch the bottom of the channel today, it is unlikely that a breakout will succeed without anything substantial to support the bears up. That said, the stochastic indicator is open to a bearish reversal here with the sharp curve Stoch lower and can even reverse here ahead of the 50.0 level "resistance". Then again, even if Bottom Canal is violated, the price will probably find strong support around 0.0, in which the stochastic readings are already in the oversold region. Therefore, we need fundamental changes in real development going forward in order for crude oil to move all the way to 75.0+ levels. Otherwise, we could see prices oriented next 0 -. 95.0 which is where the majority of 1H 2013 was trading
Time Table
chart in the short term in this case is not very useful because it only shows that the price has stabilized after the long slide down. Nevertheless, we can make reference to the soft cap of 95.5 and recent swing low of 95.0 to determine the next immediate short-term direction. Stochastic readings are pointing higher with a bullish signal, but levels "resistance" are coming. Where a bullish drop by are not a cut and dry scenario and once again traders may be better practice patience and wait to resume normal trading
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