Crude Bears Still in Control

03/27/2014 7:00 am EST

Focus: COMMODITIES

Crude oil sellers remain in control, while the bulls look to take out the 100.32 pivot to change the tide, writes trader Frank Ochoa of PivotBoss.com.

On March 18, I wrote: “After taking control of the 100 key level, sellers are eager to keep a lid on 99.55, and are currently absorbing demand between 99.10 and 99.40. If sellers continue to overwhelm buyers above 99, look for price to test the next rejection level below at the LVN at 97. If you’re bullish, this is a level to consider for a swing buy opportunity for a move back toward 99.”

Buyers defended crude oil at the 97 LVN, which triggered a move into the 99 key level, and beyond. As a matter of fact, crude rallied as high as 100.29 in Monday’s session before responsive sellers entered the market to defend 100.32, which is our new pivot for the week.

While buyers defended the 97 LVN, the bears have remained firmly in control throughout the month, and are now beginning to defend the 100.32 key level, which is the value low of price distribution that developed above 99. As a matter of fact, crude oil was rejected at 100.25 during Friday’s market, which essentially marked the high for the week. And then to begin Monday’s trading, crude oil pushed just four ticks beyond last week’s high price before being immediately rejected back to the 99 key level. The failure to expand the range is extremely important, and further rejection could send price back toward the bottom of the current range at the 97 LVN.

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Again, this is just another clear sign that the bears are currently in control, and are defending the rips with each new lower high. Of course, that doesn’t mean the battle is over. If the bulls can reclaim 100.32 and gain acceptance above this level, we could see a swift short covering rally that could lift price into prior value at 101.44, with a shot to rally to the top of value at 102.24.

The bears will look to keep a lid on 100.32, and will attempt to run the stops below the 99 key level in order to put pressure on the bulls that are absorbing supply at 98.06. This is the level that must be taken out in order to retest the LVN at 97, and perhaps drop into lower value at 95.98.

By Frank Ochoa of PivotBoss.com

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