When Will Oil Find a Bottom?

It has been only four months since we have seen Oil at $100.00 per barrel. Oil has since lost almost 50% of its value.  There has been many recent support levels that have broke. The first real oil support was 64.00. This was a level I was watching. When we broker this key level we went fast to 57.00. Today as I write this article we are at 55.65, below this we have a $50.00 support. $69.70 is overhead resistance.

55.00 area  is support

You can see the above chart shows a very aggressive trend to the downside on oil futures. It is important to note that even if we do get a bounce on our key 55.75 level, we may not see much in the way of a pop. I will be buying some oil at these levels, however.

On Friday oil broke down again stumbling all the way down to $57.80, its lowest close in almost 5 years. I think this warrants attention to see if this is going to continue or pop.

Last week we used Fibs as well as other strategies to try and define some important area. Fibonacci analysis is often used in Futures and I find it very useful when trading in OIL. Fibonacci analysis is based on the famed medieval mathematician of Italian origin who found that a key series of ratios tend to repeat themselves over and over again in nature. It has been used to even predict the shape of flowers and snail shells, and can also be used to predict key levels in the stock market.

Last week I was bearish on oil, this week I think we may pop. I am watching oil close to see when and if we get a pop at our key levels. So when and where will oil find a bottom? The answer will lie on these supports and I will post on this next week.