What's more, the technicals strongly support the move. This week we saw a two day counter-trend rally move oil up 6%. With today's price action, we have a firm rejection of the counter-trend rally, which means the downtrend is still intact and the move lower can proceed. Today, we also saw the break below the lows set prior to the counter-trend rally, a level that also corresponded with the 76.4% fib retracement of March's rally to 2015 highs.
100% is the next fib retracement level at 42.00, which falls within range of a fib extension zone b/w 41.55 and 43.25. The pace of the current downtrend from late June predicts 42.00 within 13 days.
Keeping in mind the absolute and relative low levels of oil (versus other asset classes) could cause that move to come much faster. A long vol, options strategy might be a useful way to play the move. Next week I plan to take some profits in my 45 puts and roll into shorting the directly.
Also, keep the Mexican Peso on your watch list. My macro thoughts are OIL --> CAD --> MXN.