WTI CRUDE OIL

Oil prices are rebounding but strong resistance area remains between $32 and $40. In 2009, when oil price dipped below $40 support area, it took two months to recover back above critical level and there hasn’t been a single month of close below $40. Latest breakdown below $40 has been decisive and unless we see a rally above $40 in the last trading day of the month, this will be the second monthly close below $40.

It is highly likely that the new equilibrium will form between $10 and $40. Recovery above $40 can take longer. Possibly there  will be a lengthy consolidation and the upper boundary of that consolidation remains at $40.

Both charts are plotted on monthly scale. Each bar represents one month of price action.