Crude oil traded to my target support area, with a low of $85.69 Tuesday, so where's it headed now?
This market heads into a day that can be easily swung by economic optimism or pessimism complimented by weekly crude oil inventories, which were larger than expected. With a stronger U.S. dollar Wednesday, there will be continued pressure on oil, as well as on commodities in general. Right now, it appears as though $88 is the battleground level for oil. Above it, oil simply cannot seem to find a bid. On bullish news, it will still be very tough for this market to climb back.
(Related: Plunging Oil Prices Are Big Boost for US Drivers.)
So how am I looking to trade crude now?
I will look to sell the first test to $88. Another way I will be playing this is by looking to go short on a violation and further confirmation of that violation with a close below $85.50. The next level below is a major range retracement to $82.16. The back-up-the-truck price I'm looking for is $78, the major support level which is around this and last year's low.
The refined products are a bit oversold — RBOB gas traded to a key retracement level around $2.520, looking at a bit of a correctional bounce which could bring sector up a bit.