It was another hard week. First, we had results of Greeks elections, later there were rumors about Spain and finally FED meeting and rumors about QE3. For me, it is too much for one trading week. Anyway, there was some interesting action at WTI Oil, so let’s check it out.

WTI Oil

Oil has found a support at a support line around 80$, which you can see at monthly chart:

WTI Oil, monthly chart

WTI Oil, monthly chart

Last weeks were great to short oil with help of Fibonacci retracement and extension lines. You could use very low time frames, but also on medium-term time frames there were plenty of opportunities. Let’s check the 4 hour chart and see the last move:

WTI Oil, 4-hour chart

WTI Oil, 4-hour chart

We saw a strong move down (almost 12$) from A to B. After that there was a correction up to point C – the 50% retracement line. Take a close look and notice that point C was right at 55 moving average. Resistance here was strong and sellers came back. Eventually there was a breakdown below 81$ and we saw a move down to new lows at 77$ (point D). For now price has found a support here – very near to the 127% Fibonacci Extension line. For now it looks like there might me some move up, but the downtrend is still very strong.

When you see a strong selloff or move up then it is much easier to find good ABCD Fibonacci setups on lower time frames. Moving averages are a great help here.