It is not until we break down below the $67.50 level that I start to think about shorting.
The West Texas Intermediate Crude Oil market has rallied again during the trading session on Thursday to break above the $73 level. Furthermore, we have finally made a “higher high”, at least on the short-term chart. That being the case, it looks like we are ready to go higher and therefore I like the idea of buying dips in order to take advantage of value as it occurs. The 50 day EMA underneath offer quite a bit of support just below the $70 level, and therefore I think the $70 level will be important by itself.
When you look at this chart, we had recently broken through a major downtrend line as well, so that makes quite a bit of sense that momentum picked up the market out. I think at this point, it is very likely that we are going to see an attempt to reach towards the highs again, especially as people are banking on the reopening trade working out. The reopening trade is something that people have been banking on for a while, as the demand for crude oil should pick up. Furthermore, OPEC has already stated that they expect demand to pick up later on this year, and therefore the outlook is considered to be bullish from a fundamental perspective.
Adding more to this is the fact that there has recently been a lot of disruptions when it comes to refining in the southeastern part of the United States, which in and of itself can move the market. The US dollar falling could also help this market, but right now it must be said that the greenback is relatively stable so I would not read too much into that connection quite yet. All things been equal, the $75 level above probably offers a bit of resistance, but it will be short-term at best. All things being equal, I do anticipate that every time we do drift lower, there will be plenty of value hunters to pick things up. In fact, it is not until we break down below the $67.50 level that I start to think about shorting, because it would be a breakdown of several support levels to get through there, and then at that point in time it is very likely that you would have a complete shift and overall sentiment when it comes to this market.