Crude Moving Above Psychological Level

Crude futures crashed on Monday, following U.S. equities into the dumps.  Valuations in the stock market have investors worried about the U.S. and global economy as a whole for obvious reasons.  Therefore, investors ignored the OPEC supply constraints and sent crude tumbling.

However, Crude futures are recovering above the psychological $40/bbl area on Tuesday, and are now lodged solidly between our 1^st and 2^nd tier downtrend lines.  Our uptrend and 2^nd tier downtrend line experienced an inflection point yesterday with a highly negative result.  Therefore, the futures could be sending a message that the downtrend is far from over.

Fortunately for the bulls, the Crude futures still have February lows as a base, so potential losses should be limited in the near term.  We expect a near-term rise in Crude futures today with a possible retest of our 2^nd tier downtrend line.

Fundamentally, we find supports of $40.08/bbl, $39.42/bbl, $38.87/bbl, and $38.08/bbl.  The $40/bbl area remains a reliable psychological cushion for the near-term.  To the topside, we see resistances of $40.73/bbl, $41.26/bbl and $41.75/bbl, and $42.22/bbl.  Meanwhile, the $45/bbl area will serve as a psychological barrier.  Crude futures are currently trading at $40.61/bbl.

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