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Completing Inside Day of Rest
Although an inside day shows consolidation, the day may end with a bullish hammer candlestick pattern. Even though this pattern carries more weight when it is at the low of a trend, it nevertheless shows buyers in charge at the end of the day. That demand could carry over to the next day’s trading session. Therefore, a rally above today’s high will show strengthening. Whether it is enough to subsequently exceed yesterday’s high of $70.49 remains to be seen.
50-Day Moving Average is Key to Watch
The 50-Day MA also provides a potential initial upside target. It is currently at $71.05 and falling. Consequently, the 50-Day line may be within the $70.61 to $70.72 initial target range by the time it is approached. This would make the 50-Day MA potentially more significant, and it may be more likely that resistance would be seen there leading to at least a pullback of two to three days or more.
On the way down from the January crude broke below the 50-Day MA and then swung back to successfully test it as resistance before falling further. The current advance, therefore, will be the first more significant test of the line as resistance. If the price of crude oil is to have a chance to head towards higher potential price targets, it first needs to get above and stay above the 50-Day line.
Higher Potential Targets
Higher potential targets include the 38.2% Fibonacci retracement at $71.24, a 61.8% retracement level at $71.84, and the 200-Day MA, currently at $73.28. There is also a 50% retracement level measuring the full recent decline at $73.08, which is now close to the 200-Day line.
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