Crude Oil Slumps; Bearish Double-Top Reversal Looms

march2011_crude.gifCrude oil futures for March delivery on the New York Mercantile Exchange on Thursday dropped sharply and hit a fresh two-week low of $89.60 a barrel as of this writing. Prices also have fallen below psychological support at $90.00 a barrel. Price action in crude oil futures the past three weeks has been choppy and sideways at higher levels and it now appears the market bulls became exhausted at those higher price levels. The strong downside price action in March crude oil futures on Thursday raises the specter of a bearish double-top reversal pattern forming on the daily bar chart, with the twin peaks being the January 3 high of $93.44 and the January 12 high of $93.46. A drop in March futures prices below solid technical support at the January low of $88.45 would confirm the bearish double-top reversal pattern on the daily chart and would also produce fresh near-term technical damage to begin to suggest that a near-term market top is in place. Stay tuned!–Jim Wyckoff

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