Crude oil is trading above and below a key technical confluence area. Who will take charge?

Crude oil is trading lower today as the market weighs the potential for an end to the war with Iran. In his 60 Minutes interview, Pres. Trump signaled he was reluctant to escalate the conflict. As Adam Button reported, the selling picked up after Al Hadath said Trump asked Iraq’s prime minister to relay proposals to Tehran and help mediate an end to the war. The headlines are taking some of the war premium out of crude oil.In the video above, I take a look at what the selloff did to crude oil technically. The price broke below three support levels in a span of just 24 cents. Where can sellers now lean against resistance to define their risk? What would the buyers need to do to turn the move lower into a failed break? I walk through both scenarios on the chart.The politics matter. Republicans lost control of both the House and Senate in the midterms, and the war and higher gasoline prices were part of the backlash. That gives the White House more incentive to find a diplomatic solution. For oil traders, the question is whether those efforts lead to progress on the Strait of Hormuz. Adam also noted that a Qatari official pushed back on a report that Iran had dropped its demand to control the strait and collect transit fees. That helps explain why the price can move quickly in either direction as the headlines cross.Technically, the move lower took crude oil below three levels.The 100-day moving average at $87.17.The 200-day moving average at $87.10.The 50% midpoint of the move up from the July low at $86.93.That $86.93 to $87.17 area is the barometer for both buyers and sellers. The sellers made the first move by taking the price below the entire cluster. Can they keep it there? If a bounce stalls below $86.93 and the price turns back down with momentum, the old support starts to act as resistance. That would give sellers more confidence that there is room to run to the downside.Conversely, if the price moves back into the zone, the sellers’ grip starts to loosen. Get back above $87.17 and stay above it, and the break lower starts to look like a failed break. That could force some sellers to cover and give buyers room to rotate the price higher.The education. When two moving averages and a retracement level come together, think of them as a zone. The first move through the zone tells you who made the first push. The next test tells you more about who is in control. Here, $86.93 is the level sellers can lean against from below, while $87.17 is the level buyers need to reclaim and hold. That gives both sides a nearby level to define risk while the headlines keep coming. This article was written by Greg Michalowski at investinglive.com.