Technical Analysis Crude Oil for 8/4/15

Crude oil prices tumbled through horizontal trend line support and is poised to test the lows from March at $42.03.  Prices were pulled down by the softer than expected Chinese PMI report. The China CAIXIN Manufacturing PMI fell to 47.8 in July, down from 49.4 in the previous month. The drop to a 2-year low suggests that contraction in China’s manufacturing sector accelerated at the start of the third quarter.

Resistance on crude prices is seen near former support now resistance at 446.78 and then the 10-day moving average at $48.13. Momentum is negative as the MACD (moving average convergence divergence) index is printing in the red with a downward sloping trajectory.  The only caveat is that the RSI (relative strength index) is printing a reading of 23, below the oversold trigger level of 30 which could foreshadow a correction.