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Watching for Signs of Strength
If signs of strength seen today are sustained, then crude oil should show little difficulty in surpassing the next higher potential resistance zone around Tuesday’s high of $68.85. If the price exceeds that level, it may indicate a potential reversal and signal the beginning of an upward trend. This doesn’t mean the trend would keep rising but at a minimum there is the potential for the completion of a rising ABCD pattern at $69.87. Wednesday’s low (C) is a higher swing low relative to the bottom of the March decline at $65.41 (A).
Weekly Chart Confirms Bullishness
The larger time frame weekly chart confirms signs of strength. A bullish doji hammer candlestick pattern occurred last week with a high of $68.03. It was followed by a weekly breakout this week. Crude oil is on track to end the week in a bullish position near the highs of the weekly price range. This would position it for a bullish continuation.
If the initial $69.87 target is surpassed, there is a confluence zone around $70.61 to $70.81. That price zone starts with the 50% retracement of an internal decline along with the extended target from the ABCD pattern that is shown on the chart. Higher up is the 50-Day MA. It is currently at $71.96 and is falling.
Strong Weekly Breakout
Given the weekly reversal that will likely confirm this week with a weekly closing price above last week’s high, a couple weeks up wouldn’t be unusual, at a minimum. The weekly breakout looks clear and decisive so far. Therefore, what happens next will be telling. Does the advance stall and chop around before bullish momentum returns, or does next week start with a breakout to new weekly highs?
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