U.S. crude falls below key support at $88.55 -
Bit old news ( Wed May 30, 2012 2:53pm EDT )
http://www.reuters.com/article/2012/05/30/us-crude-technicals-fibonacci-idUSBRE84T0ZS20120530
1/ Technical analysts at Barclays Capital said in a note to clients on Tuesday evening that if prices remain weak into the end of the week, U.S. crude could soon fall to $80 a barrel.
"A move below $89.15 in U.S. crude and a weekly close below $106.20 in Brent would ... resume weakness toward 80.00 and 100.00, respectively," Barclays technical analysts led by Jordan Kotick in New York said.
Prices are down more than $22 a barrel since hitting $110.55 on March 1, as fears over the health of the euro zone have intensified.
Over the same period, London Brent crude prices have fallen from $128.40 a barrel to below $104 a barrel as of Wednesday, the lowest price since December 2011.
2/ Analysts also pointed to a drop in the euro to below $1.25 as a key cross-market support point for riskier assets such as commodities. That level gave way on Tuesday and selling accelerated on Wednesday, taking the single currency to a near two-year low against the dollar of $1.2408.
BULLISH INDICATORS
The extent of the selloff has led some market analysts, however, to say a number of technical indicators now show an oversold oil market.
3/ The relative strength index, which rises and falls depending on the strength of buying and selling, has been below 30 for U.S. crude oil futures since May 11, falling to 23.15 on Wednesday. A reading below 30 indicates a contract is oversold, while a reading above 70 indicates it is overbought.
4/ Analysts have indicated that the next big support line for the euro is $1.235, which could spark a bounce in markets if it holds. The next big support line for U.S. crude is seen around $85 a barrel.
