CRUDE OIL continue to shake off the recent "frost premium" as well as cope with the outlook of a world, at least for the time being, without China being the buyer of first and last resort when it comes to commodities. The question of whether traders will see $70.00 or $90.00 oil first is one best left for options players in my opinion. The market does not appear to be finished testing the downside of its range. The $78.00 level appears to be a likely target for the February contract before it expires.
$78.17 sets up as a strong resistance point for February and should hold initially. A rebound back to $78.60 should offer a potential day trading opportunity. These levels are based off a ratio where a move in either direction in the crude market of $1.40 to $1.70 often results in a retracement of that move back to 90 cents. It appears particularly relevant when the market is trending down.
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