Light Sweet Crude (CL) has been in decline, and heading toward a key support level. How the price acts near that level will let us know if this is a major buying opportunity, or if oil prices are likely to continue sinking.
Since June 2016 the price has been moving in a slightly ascending channel. As of the March 22, the price of oil has reached the bottom of that ascending channel. On the June contract the March 22 low is $47.58. It is possible the price could move a bit below that, as it is likely there are a lot of stop loss orders near the November 14 swing low of $46.25 which is an alluring target with the price so close.
Overall, crude oil is in an uptrend based on the rally seen in early 2016. The sideways movement (slightly ascending channel) that followed is likely a correction within that long-term uptrend.
Based on that uptrend, longs between $48 and $47 are attractive. A decline below $46.25 is a possibility, but watch for false breakouts. If the price drops below $46.25, and then quickly closes back above it, that is a pretty strong signal that a short-term bottom is in place. A rally back up into the $49/$50 region would also help confirm that a bottom has formed near support.
If the price continues to slide below $46, best to get out as the outlook becomes more uncertain at that point.
If the price rallies off the bottom of the channel the next target is $57 to $58 (top of channel). Since the price is still in a long-term uptrend (until proven otherwise) the price is still expected to break out of the channel to the upside. In that case, the longer-term target is $65 to $68.