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Oil Reverses to the Downside


Wednesday January 26th, 2011
Oil Reverses to the Downside
by Mike Paulenoff www.MPTrader.com

Let's notice that after rallying strongly yesterday and recovering to test resistance around $88.00, crude oil prices have reversed to the downside again and have pressed to a new reaction low at $85.63.

Yesterday's upside failure confirms the importance of the $87.80-$88.00 resistance plateau, and today's resumption of weakness provides further technical evidence that oil prices -- and the U.S. Oil Trust ETF (USO) -- are in the grasp of a correction off of the Dec-Jan top formation. The correction projects to an $82.00-$80.00 near-term target in crude, with downside "overshoot" into the area of the January 2009 trendline, now at $80.66.

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