The WTI Crude Oil markets fell slightly during the session on Wednesday, but found a bit of support at the $101.50 level. In fact, the daily candle ended up being a little bit of a hammer, so I suspect that the buyers are in fact starting to look at the massive selloff during the Tuesday session as an attempt to offer value. I believe that this market will continue to go higher, and even though we had the nice double top form, I think there’s far too much in the way of noise below to get too excited about shorting this market.
Ultimately, I think that there is a significant amount of support at the $101 level, as well as the psychologically significant $100 level. It really comes down to whether or not you believe in the divergence forming on the RSI. As you can see, the previous high at the beginning of the month of March had a much higher RSI reading than the recent high.
Because of this, you have to sooner or later recognize the divergent as being useful if you choose to trade from a technical standpoint. I don’t necessarily believe that the RSI is giving us a hand that the markets going to fall apart, but I do recognize that a move below the $100 level would signify fairly weak trading conditions.
Breaking higher would be easier.
Quite frankly, I hope we break the top of the hammer for the session on Wednesday, because it would be a buy signal, something that I am much more comfortable doing at the moment. Because of this, I think that the close today will be significant. If we get above the $102 level, I would recognize that the $105 level above is still a barrier that we have to breakout of, but ultimately if we get above there, we could see much higher pricing. I believe in the strength of oil longer-term anyway, but pointed out the RSI divergence because sometimes that can be a leading indicator of a market that’s about to change trend.