Crude futures crashed on Monday, following U. S. equities into the dumps. Valuations in the stock market have investors worried about the U. S. and global economy as a whole for obvious reasons. Therefore, investors ignored the OPEC supply constraints and sent crude tumbling. However, Crude futures are recovering above the psychological $40/bbl area on Tuesday, and are now lodged solidly between our 1st and 2nd tier downtrend lines.

Our uptrend and 2nd tier downtrend line experienced an inflection point yesterday with a highly negative result. Therefore, the futures could be sending a message that the downtrend is far from over. Fortunately for the bulls, the Crude futures still have February lows as a base, so potential losses should be limited in the near term. We expect a near-term rise in Crude futures today with a possible retest of our 2nd tier downtrend line.

Fundamentally, we find supports of $40.08/bbl, $39.42/bbl, $38.87/bbl, and $38.08/bbl. The $40/bbl area remains a reliable psychological cushion for the near-term. To the topside, we see resistances of $40.73/bbl, $41.26/bbl and $41.75/bbl, and $42.22/bbl. Meanwhile, the $45/bbl area will serve as a psychological barrier. Crude futures are currently trading at $40.61/bbl.

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