August Crude oil futures on the New York Mercantile Exchange are in a seven-week-old downtrend from the early-May high of $77.08 a barrel. Prices last week hit a fresh 10-week low of $68.65. Now, last week’s low of $68.65 is important technical support for the bulls to defend. A close below that level would produce more serious near-term technical damage and would suggest a new trading range between $65.00 and $70.00 a barrel. For the crude oil bulls to regain some fresh upside technical momentum, they will have to push August futures prices back above solid chart resistance at $73.00.
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On a longer-term technical basis, the weekly continuation chart for nearby crude oil futures shows that prices have been in a trading range at higher price levels for several weeks–bound by support at the May low of $67.42 and resistance at the all-time high of $75.35, basis nearby futures, scored in April. The weekly chart also shows that a longer-term uptrend in crude oil prices remains firmly in place. However, the Moving Average Convergence Divergence indicator overlaid on the weekly crude oil chart has just produced a bearish line crossover signal, whereby the MACD line crossed below the “trigger” line of the indicator.
By examining recent bearish MACD line crossovers on the weekly chart, one can surmise that in the coming weeks nearby crude oil futures will drop down and test trendline support just below the $65.00-a-barrel level.
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