Oil Maintains the Range

Oil has trekked downward from its rally yesterday. The rally was paltry with respect to what oil has been able to muster with proper buying momentum. We are still largely in a broad sideways corrective phase. The level 72.99 appeared to be a top for oil, as we identified yesterday. Currently, we are stabilizing around support in roughly the middle of the range, at 71.00, a technical and psychological level. The Kovach OBV is still relatively flat, and has arched over with the selloff, which suggests that if we don't find support here, that we could test further levels on the downside, including 70.01 and 69.67. These levels have provided strong support in the past, and are the lower bound of this corrective phase. If we take these levels out, then 68.96 is the next level of strong support, the neckline of our inverse head and shoulders pattern, from which we originally broke out to higher levels in the 70's. If this neckline can't hold, then it's a very bearish sign, and we should easily be able to test lower levels in the mid 60's, like 66.00, a strong technical and psychological level and the low of our second shoulder.