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Looking at this chart, we have much further to go to the upside than down, but if we were to break down below the $100 level, then it would be a very negative turn of events.
The West Texas Intermediate Crude Oil market rallied after initially falling on Monday to show signs of life again. The WTI Crude Oil market is approaching the $110 level and by extension the 50-day EMA. If we can break above all of this, and there is nothing on this chart that suggests that we cannot, then it’s likely that the market will go home much higher. At that point, it’s very likely that the $120 level gets targeted. That’s an area where we have seen resistance previously, so it does make sense that it makes for a nice target. Furthermore, it’s likely that we could even eventually break above there.
When you look at this chart, you can see that the market has been in an uptrending channel for a while, and there is nothing that suggests this attitude is going to change. That being said, if the market were to break down below the $100 level, that would be very negative, perhaps opening up even more selling pressure. The $100 level not only has the previous action around it, but it also has a significant amount of psychological input.
The market breaking above the 50-day will be a sign that we are ready to continue going higher, as it has a certain amount of interest that algorithmic traders will pay attention to it as well. Demand for crude oil will continue to strengthen, especially as the attempts to get the UAE to pump more crude oil seem to be somewhat fruitless by both France and the United States. In other words, the supply is going to continue to dwindle. Furthermore, the Strategic Petroleum Reserve of crude oil in the United States is at the lowest level since 1986, and that does no good whatsoever to help the idea of the market trying to pull back. Ultimately, I think that oil has further to go, and especially now that we are in the midst of the “summer driving season” in the United States, demand will certainly pick up again. Looking at this chart, we have much further to go to the upside than down, but if we were to break down below the $100 level, then it would be a very negative turn of events.
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