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Counter-trend Rally in Play
Given the sharp five-day decline to a low of $55.23 that ended last week, there is a strong case to be made for a sharp countertrend rally as well. Crude oil fell by $17.25 or 23.8% following the April 2 high of $72.49, measured to last week’s low and the low of the bearish correction. It has been consolidating off that bottom until the upside breakout that triggered today. Certainly, there can still be some backing and filling within this week’s price range of $60.40 to $64.72, before an advance might continue.
But this week will end with a higher weekly high and higher weekly low, a sign that buyers are stepping in more aggressively than they have recently. Furthermore, today’s bullish advance follows a bullish outside day from Wednesday, another bullish sign. Traders and investors will likely see short-term weakness as an opportunity given the new bullish signals in crude oil.
Upside Targets Start Around $65.00
The first key upside target zone is from the confluence of several indicators from $65.40 to $65.89. Prior lows and now potential support are at $65.40 to $65.65, while the 20-Day MA, now at $65.72, and the 61.8% Fibonacci retracement at $65.89 complete the price range. A little higher is the initial 100% target from a rising ABCD pattern (not shown) that completes at $67.08. Subsequently, there is the 78.6% Fibonacci retracement at $68.79, which is joined by the 127.2% extended target for the ABCD pattern at $69.31.
For a look at all of today’s economic events, check out our economic calendar.
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