The West Texas Intermediate Crude Oil market broke to the upside to smash through the top of an ascending triangle that we have been building up for some time. The $70 level has offered a little bit of resistance and, as a result, it is not a huge surprise to see that we have pulled back just a bit. The candlestick is shaped a little bit like a shooting star, but at this point I think we have blown through enough resistance that we could go to the upside again. After all, the OPEC+ meeting during the day on Tuesday suggested that there was going to be a little bit more output for crude oil, but at the end of the day there is still a significant amount of demand.
The $70 level has a certain amount of psychology at play there, so it is not a huge surprise to see that we struggle. Nonetheless, this is a market that I think has plenty of support underneath, and with the “reopening trade” coming into focus, I think it makes sense that the market would continue to go higher longer term. Based upon the “measured move” of the ascending triangle, we could be going as high as $75 above.
Underneath, we have the 50-day EMA that is tilting at a 45° angle and walking right along an uptrend line that has been important for quite some time. It is not until we break down through all of that that I would be concerned about the crude oil market, and it is obvious that the overall trend is very strong. If we were to break down below there, then it is hard to tell where we would end up, because it could be such a shock to the system. At this point, I think that pullbacks continue to offer plenty of value that people will be looking at, so I like the idea of buying on dips that show signs of support. Longer term, I do not know where we will end up, but I would not be surprised at all to see this market looking towards the $75 level. However, I think we could go even further than that during the summertime, as oil is typically strong during that timeframe.