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WTI Crude holding strong longer term support as traders eye OPEC meeting on November 27th

WTI Crude has fallen dramatically in the past five months. In fact in the last 21 weeks oil has fallen in all but four of these. It’s a dramatic collapse which has taken us below 2011 lows of 74.95. We hit a low last week of 73.25. Perhaps the OPEC meeting next week could not come at a better time. There is of course talk about potential production cuts to support the price of oil, which is likely to be the only way that a slide in prices will be halted, when we bear in mind how the global economy appears to be slowing.
A look at the longer-term charts does at least show we are holding onto an important longer-term support level. If OPEC can get its act together and show some unity, the charts do appear to show the potential for a base after the slide from 107.68.

The monthly chart above shows how we are just holding below 2011 lows. More importantly however we have held onto the longer-term 50% Fibonacci support around the $74 area. Of course the market is severely oversold in many timeframes but nevertheless will need a trigger for traders and investors to feel confident that oil can stage a recovery. Perhaps WTI Crude can continue to hover above the $74/$73 area before the meeting.
If OPEC members are desperate enough to act together and provide a positive outcome for the oil price from the meeting, we need to be prepared with some upside targets. In early November we hovered above 76.40/50 so this would be the first obstacle to a recovery. Above here is certainly more positive in the very short-term at least and it would be reasonable to look for the next target of 78.00/25. There is quite a lot of resistance around the 79.50 area from October lows and early November highs, so this would be our second obstacle. Once through there we could target longer-term Fibonacci resistance in the 81.30/40 area. Here we are very likely to stumble in the early stages of a recovery and if Bulls are going to feel more confident about a longer term recovery into next year they will need to see a sustained breakthrough late October highs of 82.90/83.25.
There is a small positive candle formation from Fridays bounce off 73.25 which helps to confirm that the $74 level is at least being defended. However this is still fragile without a clear bottom pattern and traders will be watching carefully to see if prices break and close below Friday’s low. This would be likely to trigger stops on fresh long positions and we could quite quickly see a move to 71.00, perhaps as far as 69.50 in the first wave of fresh sell-off. Below here we then meet the lows for 2010 at 67.15 which of course will be crucial.
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