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How Low Can Oil Go???? Yeah, See How Low...

Just when you thought oil couldn't go any lower.... BAM it goes lower!

Some oil producers are *paying* customers to accept their output.  Say what?!?!  Yeah, it's true.

But let's focus on the futures contract, June in particular.  We're already hearing stories about hedge fund managers being wiped out trying to call a bottom.  That's unfortunate.

We're not in the prediction business of calling tops or bottoms rather, we're in the reaction business to technical analysis levels in both directions.

With that said, and fresh new overnight lows, we set out to work on some "math problems" to see if we could establish some technical levels for Oil's June futures contract /CLM0.  And this is what we saw...

How low can oil prices go?

The Daily chart moved in a technically precise level overnight tagging bear profit targets at the Fibonacci extension -61.8% level and support/resistance level at $11.79 and has bounced from there.  But wait, all of those who are thinking it can't go any lower let me jump in now in fear of missing out... The unthinkable could happen, it could go even LOWER!  Yes, lower...

When we look at a Monthly chart dating back to the 1980s we can see price action and structure down below $10.  Specifically support at $9.75 but more importantly another bear profit target at the -23.6 Fibonacci extension around the $6.80 area.  So that could be a desired entry level of interest and not any higher.  Sure, price may never reach that level again ever and that's ok with us because we'll just use technical analysis tools to find more desired levels of interest.  This is how we keep the emotions out of our planning and protect our capital.  Unfortunately, the Fear Of Missing Out (FOMO) has already cost countless traders significant portions of their accounts, and in some cases entire accounts.

So there you have it.  That's our take on Oil and we'd love to hear yours!

Enjoy this free Think or Swim Monthly /CL chart http://tos.mx/z79SxMz 

Would you like a 7-Day trade boost by seeing more of our charts?  If the answer is yes, maybe, or heck yeah click here.

How low can oil go?

 

1 comment

  • Wonderful analysis there Tom and just one of the reasons I’ve come to love ChartPros so much!

    John Woods

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