The West Texas Intermediate Crude Oil market did very little during the trading session on Friday, but despite the fact that we had no real range for the day, the reality is that the market was willing to sit at these elevated levels after the last three bullish sessions. This tells me that traders were willing to hang on to their positions heading into the weekend, which is a sign of confidence.
Nonetheless, there is a significant amount of noise just above, so be cautious about putting too much money into the market right away. I think we need to stabilize at the very least and hang on to the $70 level in order to get long. The market also looks as if there is going to be a significant amount of resistance at the $75 level, which is an area that has offered resistance, and will be a bit noisy due to the psychology of that figure. Furthermore, the 50-day EMA sits right at the $70 level, which is a major technical indicator as well.
When you look at the action from earlier last week, we had a massive selloff on Monday, a hammer from the Tuesday session, and then a massive green candlestick on the Wednesday session. This has been a major three-bar reversal that now looks very important for the longer-term move. At this point, as long as we do not break down below the hammer at that reversal, it is likely that we will continue to find plenty of buyers regardless as the reopening plate continues to be the big mover for this market. Ultimately, it certainly looks as if there is much more in the way of upward pressure, so I think that it is only a matter of time before we see a breakout if all things stay the same. Oil will continue to be very volatile to say the least, so it is probably going to be a scenario where we chop around and try to build up enough inertia to finally go higher. Ultimately, this is a market that is going to continue to focus on whether or not the global growth situation will keep being a major driver.
