Last weeks were very intense. Few weeks back majority of traders were expecting two things:

  • euro to go down
  • oil to go down

As you know, many people got burned on shorting euro. And oil… oil is going down strong. It stopped for a while at 42$ support, we saw some small 3$ up correction and price went down hard. It ended week at 37.57$. Daily chart of oil:

2015-12-12_oil_daily.

It is hard to imagine that this commodity in 2008 was at 150$ level. The question is – where to look for a support? To do that, we have to switch to the monthly chart. We can find here two important, possible support levels:

  • at 36.30$ (low from 2008)
  • at 35.30$ (ekkkhmmm… high from 2000)

Monthly chart where I marked this two levels:

2015-12-12_oil_monthly.

Oil is not that far away, so very soon we can see test of this support area. Just take a look at dates. If we are dealing with support lines from year 2000 and 2008 then this is sirious. I think that if there will be any strong correction/trend reverse, this might be a place. On the other hand, if this support area will also fail, then oil may go to 25$ – 35$ range move (25$ is an important level from past, check year 1999) which I marked on chart:

2015-12-12_oil_monthly_oil25_dollars.

Is it possible? Look at chart since year 1999. When oil broke above 25$ we saw hell of a ride. All is possible here. As I wrote, test of 35$-36$ support will be very important and I think that bulls will try everything to protect that level. Otherwise they risk to be trapped in range move below 36$ for longer period of time.