Pro: Crude Could Soon Plummet
iiTrader Founder & Chief Market Strategist
Crude oil has had a choppy ride over the last of couple days, but this is a phenomenal market to play using technicals.
The wall has been $94.45, which is the 50% retracement on the year, and a close above that level is needed to spark a potential breakout. Since then, though, crude has found major support against the 100- and 200-day moving averages at $92.60 and $92.45.
Although the market has tested just below those levels, a close below them is needed to spark bearish movement, and that would create a very negative chart setup.
So what are we watching to gauge the momentum in crude? It's simple: equities and the dollar. These will continue to be the two major movers for the market, especially with today's data.
With the dollar index above 83, crude will find it very difficult to trade above and through $94.45. Look for a close above 1552 on the S&P 500 to be bullish -- but on the other side, a failure in the S&P below $1536.75 will encourage selling in Crude.
If you want to play the short side of crude, consider the May crude 90-stike put options for $750 total risk. This will give short crude exposure until April 17th, when the options expire. The $90 area was recent support. and would be a downside target if the market starts to sell off.
Just food for thought! Good luck and good trading