The chart below looks at crude oil over the past 30 years. As you can see, crude has traded inside its rising channel (A). Crude oil is down over 15% in the past month. Was this the result of a dangerous kiss of resistance?
Oil hit rising channel support earlier this year -- just below the $30 level. Once it hit 20-year rising support (A), it rallied nearly 50% in a matter of months. That rally took crude to the underside of rising channel resistance at (1), where its rally stopped on a dime.
Since hitting resistance, crude oil broke steep rising support and has fallen hard at (2). Remember back in 1990 when oil peaked at $40? Well it's once again testing that high.
Broad-Market Correlation
When crude started turning weak in 2014, the broad market struggled to move higher. Once crude oil hit rising channel (A) earlier this year, it rallied and the broad market followed.
Today crude finds itself at a price point that could be very important for both the commodity and the broad market too, as the correlation between both over the past couple of years has been higher than normal.