The market continues to see a lot of momentum, and now that we have pulled back to build a bit of a bullish flag, I think it has kicked off the next leg higher.
The West Texas Intermediate Crude Oil market broke higher on Tuesday as we have cleared a downtrend line which features itself as being the top of the flag. The flag is a very bullish sign, and I think what we see here is an attempt to break towards the $85 level. If we can break above the $85 level, then it is very likely that we could go looking towards much higher levels, perhaps kicking off the “measured move” of this market that suggests via the bullish flag that we could go as high as $100. Nonetheless, it is going to take a while to get there, but clearly this is a market that should continue to find value hunters.
Any time we get a short-term pullback, it is very likely that we would see value hunters coming back into this market in order to find reasons to get long again. After all, the demand for crude oil is not sliding at all, and with the economy reopening globally, then it is likely that we could see continued pressure to the upside for quite some time. Ultimately, I think that this is a market that cannot be sold, and we have an obvious “floor in the market” near the 50-day EMA.
The market continues to see a lot of momentum, and now that we have pulled back to build a bit of a bullish flag, I think it has kicked off the next leg higher. If we get above the $85 level, then we will have made a fresh, new high, and then it is likely that we will go even higher. The market continues to see plenty of momentum traders jumping into the market as well, so with that being the case, I think it is only a matter of time before we get more and more money flowing into this market. If the US dollar pulls back a bit, just as we have seen over the last couple of days, that will offer a bit of a tailwind for this market as well, as crude oil is priced in those very same greenbacks. I have no interest in shorting this market, at least not until we break down below the $75 level, something that is not going to happen anytime soon.