Crude oil prices closed lower once again in yesterday’s futures trading session with the WTI November contract closing the session at 89.98 on the daily chart and pushing into the support area now immediately below, which is now a key level. Over the last five days we have seen consistent selling volume on the daily chart with the trading indicator changing from bright green to bright red with no transition, reflecting the strength of this bearish sentiment. In addition we also posted a pivot high on Monday, adding further weight to the downside move, a factor which is reflected on the three day chart with selling volume coupled with no demand volume also appearing. The key technical level for oil is now in the $88 per barrel level where a firm platform of price action awaits. If this is breached then we can expect to see the price of oil fall further, with a test of the next level of support in the $84.50 per barrel region.
The CAD/JPY currency pair is a proxy for oil and as such correlates relatively closely to oil, and therefore gives us an extra dimension when analysing the oil market. Once again on the daily chart we can see the bearish sentiment for the pair in the short term, with selling volume appearing during the week, a change in trend dot color from green to white, and an isolated pivot high on Monday this week. In addition, market momentum is clearly weak, with volume now in transition from bright green to dark green. The key technical level for the pair is now in the 78.00 region where a sustained area of price congestion awaits, and just as for oil, if this is breached, then we can expect to see further weakness in the pair which will be reflected in a further fall in the price of oil. The three day trends on both charts have yet to change, but should these transition to white or even direct to red, then this will add further weight to the bearish sentiment and extend the current downwards momentum into a longer term trend.
By Anna Coulling