What key reference price levels should we be watching in crude oil at the moment?

Let's take a look:

Click on image to enlarge!

A quick look at the chart above shows us two levels of confluence at the $103 overhead level – perhaps more appropriately $103.75 or $104 for a nice clean round number.

Why is that level significant to traders?

First, it’s just above the falling 50 day EMA at $102.75, which is where price closed on Tuesday the 31st.

Second, it’s the 38.2% Fibonacci Reference Level/Line as drawn from the January low to the May high. Price is challenging this level from the underside after successfully rallying off the 61.8% retracement level at $96.75.

Finally, you can also see that this level was a “Polarity Line” from February and March as price both found support and resistance near the $103.50 level. As of the morning session, Oil was failing to break above this key level and is falling lower as June begins, which further locks this level as a key barrier point or reference level to watch.

Per “IF/THEN” logic…

IF buyers push oil prices above the $104 confluence reference level, THEN we could expect an “all clear” which would call for a continued price rally to $110 or beyond.

And then “IF sellers hold the $103.50 resistance, THEN we can expect a retest of the $97.00 reference level on a downswing here.”

Those are short-term parameters, and if we draw out the IF/THEN logic further, a breakdown under the 61.8% Fibonacci Line and May swing lows at the $96.00 level would forecast a harsher breakdown to $92.50 or $90.00.

As is, these are the current short-term reference levels for the daily structure of crude oil.

For more daily updates from Corey, visit his blog at Afraid to Trade.com