Last week’s action was definitely mixed as the market reversed the prior week’s losses early on rallying to $72.90, but failed by week’s end on a sharp spike down that closed below the $70.00 mark for the second straight week.  The upside market movers last week included the dollar index falling to an 11+ month low, Goldman Sachs predicting $85.00 oil by year end, and the IEA’s increased demand forecast for 2010 for the second straight month.  A larger-than-expected drop in inventories and OPEC’s decision to maintain current quotas helped to retain gains mid-week.  Come Friday, the market made a final upthrust but lost steam at Resistance at $72.90 resulting in a solid smack back down to the $69.00-68.80 area.  Prices settled at $69.29 for the week and held onto a small weekly gain of 1.9 percent.

Technical Outlook

The weekly trend is sideways and sloping down over the past 4-weeks making up the 4 W v TL crossing at $71.85 within the long term major weekly uptrend from the yearly lows at the $34.00-33.00 level.  Coming off of Friday’s downside reversal, the early tone this week is bearish against the $69.55-71.85 range with an alert to sell any rejected advances into that range.  The initial downside objective this week is placed at the key 8-month uptrend line (8 M ^ TL) crossing at the $68.20-68.00 area.  Maintaining settlements below $70.00 this week is bearish and likely to breach the $68.00 level.  Steady price action or settlements below $68.00 is very bearish with the next key target zone at $66.45 to 64.95 consisting of the 5-month uptrend, major weekly uptrend, and the bottom of the current 4-week downtrend.

On the buy side of the market, watch for the Bulls to defend $68.20-68.00 over the course of the week.  If successful, the action will begin to favor the upside and probe into the $69.55-71.85 range.  Generating multi-day settlements above $70.00 will encourage further buying, however, only trade above $71.85 will reinforce strength and send prices back into the upper Resistance area at the 2009 highs from $73.38 to 75.00.  A solid Bull breakout above $75.00 will initially target the 38% Fibonacci Retracement level of the 2008 slide at $76.30, but has the potential for a blow off run to $78.00 to 80.00.