The West Texas Intermediate Crude Oil market fell a bit on Friday, but as you can see, we have turned around to show signs of strength again. The market is currently hanging around the $72 level. The market has recently broken above a major downtrend line, suggesting that bullish momentum is starting to come back into the market. The 50-day EMA has broken through that level, so this is a market that is going to continue to go higher.
Looking at this chart, I think it is very likely that we could go looking towards the $74 level, an area where we had seen a lot of selling pressure. The market has broken through major resistance, and I think it is only a matter of time before we reach towards the highs again. The fact that we ended up forming a bit of a hammer during the trading session suggests that we are going to continue to see value hunters jumping into this market.
If the market were to break down below the hammer from the session on Friday, then we could go looking towards the 50-day EMA, and it is likely that we would see a lot of momentum jumping back into the market. As long as the demand for crude oil continues to remain somewhat resilient, this is a market that should go higher.
What is particularly interesting is that while the crude oil market has been showing signs of life, the US dollar has also been strengthening. Typically, these things move in complete divergence, so it is a bit surprising to see how this has played out. I think this is a very strong sign for the crude oil market and you need to take advantage of the fact that the market is so clearly flashing that demand should continue to go higher, right along with price. If we can hit the recent high at $77.50, then we could explode to the upside at that point. Currently, I have no interest in trying to short this market, at least not until we break down below the $67.50 level.
