Market Update: Could we see Oil back at $50?
Hi traders, today we take a look at oil’s daily chart after buyers finally brokered through resistance yesterday. With the new up-leg starting to become established, could we see price back at $50 in the near future?
Looking at the daily price chart. We can see that buyers broke the two main downtrend lines after sellers put in the final low on the 24th of April. Since that low, we saw a series of higher lows before the range set in. I have marked in the long term range price formed after the initial rally. Price consolidated for a fair amount of time before we saw sellers make their move pushing price back to the $34 area. Buyers returned to save the pattern and since that test, we have seen the new (current) leg begin. Yes, that leg higher was great but it remained inside the overall consolidation.
That was until yesterday when we saw buyers do something that hasn’t been done since the 2nd of the March, the price as a result, closed above 443.60. This has changed the dynamic to a degree as buyers have shown they are driving momentum and remain in control of this market for now. Since this move has broken out of a range consolidation in a trend we can only assume this new move could be a continuation. Looking at the MM (measured move) we can see the range was around $8.80. Extending this amount higher we get to a projected target of 50-52.50. There’s a range as there’s nothing exact in the markets and in measured move projected targets. (Well not for me anyway)
You will also see two points of possible resistance that line up with previous lows and highs. Until tested these are nothing more than possibilities. Moving forward we want to see the current up leg hold form and if we do see a pullback it would be good to see buyers come back in from the breakout point, turning resistance into support. If we see above lower back into the previous consolidation and a new stall that could be seen as a worry for the current up leg.
EIA crude oil inventory numbers are due 02:30 am AEDT Thursday morning.