Nearby oil prices look like they are carving out a top formation off of the October 7 high at $84.43. In particular, the series of lower highs on each rally since the October 8 decline is dictating the unfolding pattern.
As long as the series remains intact, the oil market will be on the defensive. That means that as long as $82.70 contains any forthcoming strength, the developing pattern will continue to put pressure on key near-term support between $79.80 and $79.25, which if violated and sustained should trigger downside acceleration towards $77.00-$76.50 next.
ETF traders may want to watch for downside in the US Oil Fund (NYSE: USO).
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