Crude oil prices have dropped to a new session low of $64.41, going below the 100-day moving average of $65.83. The daily chart shows several support levels between $64.41 and $66.97, with today’s low hitting the bottom of this range. If prices decline further, potential targets could include $60 and possibly $55.15. Conversely, if prices rise above $66.97 and surpass the 200-day moving average of $68.56, the outlook may shift positively, opposing the current downward trend.

Significance of the Moving Averages

The recent drop in crude oil below the 100-day moving average to $64.41 represents more than just a temporary change. This average at $65.83 often signals market direction. While it may not guarantee a trend reversal or continuation, traders frequently use it to gauge market strength. The daily chart identifies a support zone from $64.41 to $66.97 where buyers previously stepped in. This suggests that sellers could pause here—not necessarily because of better news, but because prices may attract more buyers. Below this zone, we have levels that haven’t been reached in months, such as $60 and the previous long-term base around $55.15. These levels are significant; if the decline continues, traders are likely targeting these for potential trades. On the other hand, breaking above $66.97 will be challenging. This level isn’t just resistance—it’s the upper limit of the recent neutral zone. If prices manage to surpass this and also break the 200-day moving average at $68.56, holding short positions might become difficult. At that point, many traders will reassess their risk, questioning the momentum’s direction.

Market Positioning and Risk Management

This situation indicates a clear stance for traders. Currently, momentum is negative, making it easier for sellers. Short-term call spreads lose their appeal when prices are significantly below both major moving averages. However, volatility sellers might find opportunities by selling premium near the $66 level, as buyers may struggle to break through strong resistance without fresh catalysts. Managing risk should focus on market reactions around these key technical levels rather than just headlines. The market is lively—swings are large, and opportunities exist, but inaction may cost you. For now, treat each price bounce with caution until the 200-day average trends upwards or is decisively reclaimed. Observing trading volume at critical levels, especially around $64.50 and $66.80, will provide more insight than sentiment surveys or inventory data. We’re likely entering a phase where the gap between psychological boundaries and trend-defining levels will test patience. Be prepared for quick movements. Adjust strategies based on actual price behavior, not what you expect to happen. Tighten your approach around shorter expirations, and be ready to take advantage of price movements hitting known barriers unless a new factor drives significant changes. Create your live VT Markets account and start trading now.

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