For the past 9-weeks, Crude Oil has weakened from $112/barrel to below $95/barrel. This is a rather sharp drop indeed, but the fact of the matter is that the fundamentals are bearish Crude Oil, and so is the techncial state of prices. Moreover, the technicals could very well become much worse upon further weakness in the weeks/months ahead.
Quite simply, the 300-week moving average serves as a mean reversion target for prices, and in the past 5-years it has held more than 10-different times dependent upon what one would call a test or not. Regardless, this level is a very important support level - currently at $87.95, and it becomes more so given the proximity of the "head & shoulders" neckline crossing through the $85-to-$86 zone dependent upon the width of one's pencil. If these levels are violated, then a likely acceleration to lower levels becomes a high probability, with a low forecasted within the $55-to-$60 zone.
Therefore, at a minimum - a test of the 300-week moving average is likely given the seasonally weak period for Crude Oil is September through December, with the 20-week stochastic confirming further weakness...not to mention it is far from oversold levels. Hence, we are sellers of Crude Oil on rallies.