An important day for oil prices today, but purely from a technical perspective as we can see from the daily chart. Why? Because the commodity is once again approaching a key price level and one which has been tested many many times before. It is clearly defined for us by the red dashed line of the accumulation and distribution indicator at the $42.25 per barrel price point. The indicator presents each level according to its strength according to the number of times this level has held firm after being tested. You can think of it as Popeye and his spinach. The more he eats the bigger his muscles grow, and so it is here. The more it is tested, the thicker the line appears and this price has been tested repeatedly over the last few months, and even more so in November as each rally falters at this level. So hence the reason today is a key one from a technical perspective. Will this level be breached or will it hold once again? At the time of writing the latter appears to be the case. However, one thing we can be certain of is that once this level is taken out, it will provide a formidable platform of support to any longer-term rally, but if not, expect congestion to remain firmly in place.
Meantime, the fundamental picture remains waterlogged with a lack of demand and as I outlined in a previous post the JMCC/OPEC meeting made little to no impact to the commodity.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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