Hello and welcome to Cantos Charts. I'm Hemal Darjee, trader at Fat Prophets. Today we're going to be looking at crude oil, specifically light crude oil.

Now moving straight onto the charts, looking at the weekly chart to begin with, we can see that crude oil prices have actually risen quite strongly since bottoming out in 2009. Now we've seen prices form a series of higher highs, which has been a positive development and ultimately reaching a high in this year of $114 a barrel.

Now from a technical standpoint, things have actually taken a turn for the worse with prices falling substantially lower, but more importantly, breaking this long-term trend line.

However, having a look at the daily chart we can see that since May, prices have formed a series of lower lows and also a series of higher lows and prices have really just traded within this declining channel which is suggestive that we're due to sort of see lower levels emerge over the coming weeks and coming months.

In terms of sort of where do we stand at the moment, now we've had a pretty strong decline earlier this month. However, we've seen a bit of a buying pressure emerge, so over the coming days we would sort of expect this short covering rally to be limited to about the $90 region which incidentally falls in line with the technical level of support marked by the June lows, but also falls in line with the all important 50% to 61.8% Fibonacci retracement level.

So in the near term we would sort of expect support which now acts as a resistance to be tested before the broader trend continues to resume.

Now looking at this chart, this is sort of what we anticipate over the next couple of months. So a retest up to $90 before selling pressure once again re-emerges.

Looking at the weekly chart we can see that we've had a pretty strong decline over the last few months or so falling down to a low of $75 a barrel. Now prices are currently trading at $84, $85 and as we've just mentioned, we're looking a bit of a retracement up to $90 a barrel before pushing on lower.

In terms of a target, we'll be looking at around $70 a barrel, if not slightly less than that, so potentially around $68. But we do fall in line with a bit of technical level of support from 2008 which incidentally falls at $70.76.

This has been CantosCharts. My name is Hamel Darjee and thank you for joining us today.