As far as a target to the upside, we will have to wait and see how the market turns out, but it is clearly higher than where we are now.
The West Texas Intermediate Crude Oil market had initially fallen during the trading session on Thursday, in a bit of profit-taking. Furthermore, the US dollar has strengthened quite significantly during the course of the trading session, and that has put a significant amount of downward pressure at the beginning. However, we have turned around to form a bit of a hammer, and that could be a bullish sign. We had recently broken out and therefore it is likely that we are going to continue to see the same attitude.
Looking at this chart, you can see that the $73 level has offered a little bit of resistance, but at the end of the day it is not a huge area that a lot of people are going to take notice of. Pullbacks at this point in time should continue to be a buying opportunity, as the market had slice through a major downtrend line that had been followed so closely. Furthermore, the 50 day EMA is starting to break above the downtrend line and is curling higher. The 50 day EMA is an indicator that a lot of people pay close attention to and has been influential in this market.
That being said, if the market was to turn around a break above the $73 level on a daily close, the $74 level would almost certainly be targeted. It is an area that we have seen a lot of selling at recently, so therefore I think it makes quite a bit of sense that there could be some trouble there. However, if we were to turn around a break above the top of the $74 level, then the market is likely to continue going even higher. Nonetheless, I think that crude oil is a market that is ready to continue going higher over the longer term so therefore the best thing you can do in this market to simply buy the dips as we had seen during the session on Thursday. At this point in time, it is not until we break down below the 50 day EMA that I would even remotely consider shorting this market, and therefore I see no opportunity anytime soon. As far as a target to the upside, we will have to wait and see how the market turns out, but it is clearly higher than where we are now.