The West Texas Intermediate Crude Oil market has pulled back just a bit during the trading session on Thursday, but at this point in time, we are a little stretched at the moment. Ultimately, if we do pull back from here, it’s likely that we will see buyers continue to look at any type of dip as value. After all, there are a lot of concerns when it comes to the supply of crude oil as China is starting to reopen as well.
The $115 level is the top of the triangle that I have marked on the chart, and the fact that we broke above there is a very bullish sign. At this point, the market will likely see plenty of buyers jumping in every time we pull back. After all, there are supply chain issues, and of course, OPEC needs to produce more in order to make people happy and drive down prices, and they don’t look very likely to do so.
The 50 Day EMA sits at the $110 level and is rising. I think that will offer significant dynamic support, and I do not see the oil market dropping below there. If it does, then we may have to reevaluate some things, but right now there does not seem to be any hope of this market falling apart. In fact, when you look at the triangle, it suggests that we are going to go much higher, perhaps even to the $135 level, maybe even $140 given enough time and depending on where you measure the triangle.
There is the possibility of a “double top” being challenged at the $130 level, but I think any pullback from that area will end up being short-lived at best. The market is going to continue to see a lot of volatility, and every time we pull back I would anticipate that there will be plenty of people willing to try to pick up based upon FOMO if nothing else.
The US dollar has been strengthening, but at the end of the day, it’s likely that both of these marks are going to continue to go in the same direction, despite the fact that the negative correlation is more typical. Nonetheless, there’s nothing on this chart that tells me we should be shorting anytime soon.
