The single most important feature that stands out on the naked chart is the strong support level near $44.
This is not an exact level, but this area has been tested consistently since 2015 through the current retreat.
It's a central support level and the oil price has oscillated around this level. Since April of 2016, the oil price has stayed above this support level and moved in a prolonged sideways pattern.
The upper edge of the sideways pattern is near $54, making the trading band around $10 wide. This is an interesting coincidence, because oil has often traded in a band around $10 wide.
However, in the past, these were at levels $48, $58, $68, $78 etc. The oil market appears to have re-set these levels, with $44 being a central reference point. The trading band above $44 has resistance near $54.
There is a high probability that the downside projection target for the trading band is near $34.
This has been a very weak support level in the past so traders take a cautious approach to this target level. What is clear is that a fall below significant support near $44 is very bearish for oil with a potential target near $34.
However, it's too early to define a new downtrend so investors watch for evidence of consolidation around the long term support level near $44.
We use the ANTSYSS trade method to extract good returns from these oscillation rally and retreat movements.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.