Oil is breaking down
Oil is testing 36.90 a strong downside EXTENSION resistance as we can see on the weekly chart. A long-term triangle with well-defined breakout levels has been broken and the commodity is in a swing lower in what it seems to be a 5th wave. A break below 36.90 is crucial for a downside reversal and could lead to a strong downside continuation all the way to 29.13. A break and a follow-through above 41 are required for the downside extension invalidation.
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On a daily chart, we can see that the pair is in the consolidation for the downside extension belowa congestion wedge, and a confirmation of a break below 36.90 is required. Look for the short trade entries with the stop loss above 37 upon a confirmed break below 36.90. Our trading system is indicating a potential of 500 points of profit. The short trade entries invalidation to come only on a clear daily close above 41 and would trigger stops and a reversal from short trade entry to long.
We have used the combination of the top-down trading analysis to get these key levels explained in the charts.
