Many market prognosticators, including yours truly, have been a bit surprised by oil’s fall over the past week. Crude has fallen below 85; it is at 84.79 at the time of this writing. So where are we headed now? Let’s take a look at some information that may be worth considering.
1. Crude oil inventories are rising. This would suggest weak demand, which may favor lower prices.
2. Mubarak’s departure from Egypt has coincided with a further fall in oil, though the situation in Egypt does not appear to be fully resolved, as the next phase of who is going to stay in power is not entirely resolved. There is also the issue that regime change is spreading throughout the Middle East. While political instability outside of the United States can lead to greater demand for US dollars, and thus a potential strengthening of the US dollar, I personally think energy will come into play at some point if the regime change meme continues to spread. Blocking oil distribution as a political tactic could send prices higher. Alternatively, those who see the potential for rising oil prices due to Middle East political tensions but are concerned about a stronger dollar also resulting from these tensions may wish to take on additional positions in the forex market so that their net exposure is long oil relative to another currency -- such as the British pound or Euro, both of which have been experiencing their own sovereign debt crises.
3. Personally I am bullish on oil and other commodities relative to many currencies, including the US dollar. Dollar bears may wish to note the increase in credit card debt in the United States, which would fuel expansion of the money supply. M2 did manage to slightly increase in January.
Now, let’s take a look at the charts.
Below is the daily chart. We see a flurry of red candles. Personally, I would not consider a short or long position until we start to see the appearance of some bulls. I’m in “buy the dip” mode and so would want to look for signs that bears are exhausted. 
On the weekly chart, seen below, we see 50 and 200 moving averages meeting around the 80 level, where a key Fibonacci level sits as well. These technical indicators, coupled with the round number figure, lead me to think it may be a worthwhile entry point if the market reaches that level. I would like to take a closer look at price action around those levels, as well as volume, open interest, and technical oscillators at that time as well. 
Feel free to share your questions and thoughts in the comments section below.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: Waiting to Buy the Dip in Oil
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