Rich Ilczyszyn: Levels to Watch On Crude

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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.

(Poll: Where Do You Think Gasoline Is Going?)

What Rich is Watching

Read on for 10 Things You Need to Know to Trade Futures

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