Crude oil dropped almost $3 last week and is inching closer to confirming a double top. Last week it broke the 10 week exponential moving average and touched down on the 20 week moving average at $89.32 before settling just above it at $89.92. The RSI broke support at the the lower trend line and dropped down to 55. The last time, the RSI broke support in this way, it dropped all the way down to 32 corresponding to price drop of about $20.
Brief candlestick analysis
Last week’s tall solid red candlestick confirmed the bearish sentiment of the previous candlestick. Support remains at $85.51 (the low of the doji candlestick at the beginning of December 2007) and resistance is at $91.4, the midpoint of last week’s solid red candlestick.
Final Thoughts for the Chart

If it breaks the 20 week moving average, the next test will be support at $85.51 (as mentioned above) and $84.47 (the upper shadow in late September). If it breaks support there, it has doubled topped and wound need to drop another $15 to about $70 complete the pattern. Doing that would probably require it to break through the 200 week moving average and the lower Bollinger Band which it has only done twice since 2000 (in late 2001 and after the double top in 2006).
Remember: this technical analysis is provided as a public service so that people start to understand that oil prices go in cycles and that volatility is increasing which means we may see some drops here and there but the trend is upward and for wider swings. Should also be noted that technical analysis is solely based on chart patterns and that changes in fundamentals such as oil stock inventories can easily overwhelm and alter technical trends.