Oil Breaks Lower As Price Likely Headed To $74/bbl

Crude oil saw a sharp decline in the past two weeks as it fell from $84/bbl to $78.50/bbl. Price is following a classic wedge pattern with the upper trend line acting as resistance and the lower trend line acting as support. In the chart above, investors can see price reacting to the trend lines perfectly.

Based on technical analysis, this alerts investors to further downside in oil in the coming weeks to a likely target of $74/bbl. This would be the lower support trend line of the wedge pattern.

Analyzing at bigger time frames, oil is at risk for a much bigger decline. Not only is the chart bearish on the weekly and monthly time frames, but the macro also aligns.

As the U.S. economy continues to slow and China fails to recover. Demand for oil will fall. In addition, republican nominee and former president Donald Trump has said he will increase drilling. These are all bearish factors for the price of oil.