Just as the oil market collapsed when everybody was proclaiming higher prices, oil will probably stabilize sometime in 2016 as everyone expects it to keep crashing.
As it has broken through several levels of support, it will need to trend sideways for an extended period before it has any hope of breaking out.
The Technical Picture for Crude oil price in 2016
Oil has closed below the psychological level of $30 on a weekly basis; this could drive oil all the way down to $20.00. The more likely levels though fall in the $23-$25 ranges. As long as oil does not close below $23.00 on a weekly basis, oil will start putting in a slow bottoming formation.
Once oil puts In a bottom and for this to occur oil cannot close below 23 on a weekly basis. Otherwise, all bets are off. Oil will need to put in a slow channel formation; prices will most likely be contained to the $24.00-$36.00 ranges. And only a monthly close above $40 will widen the trading range. Oil’s trading range will then shift to $36.00-$58.00 ranges, with the possibility of overshooting to $65.00.
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