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Can Crude Oil Trade Above Weekly Resistance?Crude Oil is at an interesting point on its weekly continuation chart. It is sitting just under a 7-point downward sloping resistance line dating back to March 2022. The last time it reached this line, September 2023, it sold off 20+ points over the next couple of months. However, I do think there is a good chance prices will break above resistance because price action has been strong the past month. Over this time, it has formed an ABCD pattern that is bullish due to its 50% retracement. I believe we could see a rally up to a range of 86.21 to 95.03 before seeing a nice move back down to the upper 70s. Here is how I would break down this upper resistance zone:
If prices end up trading inside this resistance zone, then I believe the rally will have a tough time exceeding it. Additionally, due to the weak nature of the current rally, I think we could see a decent correction back down to a minimum of mid to upper 70s. Why is the recent rally considered weak? First, it is because the first two ABCD patterns, which are the dominant patterns, both have deep retracements. The deeper the retracement, the weaker the trend. Second, the skewing on the first two patterns is left-handed which indicates weak momentum. This should be an interesting week for Crude Oil. I would not be surprised if the weekly resistance line holds and the current rally fades. But I am leaning to an upside breakout that should find resistance at 86-95. On the date of publication, Thomas Bills did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. |
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