The West Texas Intermediate Crude Oil market initially fell on Friday but turned around to show signs of strength again. By doing so, we ended up forming a bit of a hammer, which in and of itself is bullish. However, I would also point out the Thursday candlestick showed the same exact type of price action, meaning that any time this market pulls back, there seem to be buyers willing to pick it back up. This is a very bullish sign, and the fact that we have been in an uptrend to begin with only adds credence to it.
At this point, I believe that the $85 level will be your target and resistance as it is a large, round, psychologically significant figure. Breaking above there will only be a matter of time from what I see, as we have a massive lack of supply in a world that is waking up from the pandemic. OPEC has shown no real interest in trying to increase production, and the United States has shot itself in the foot when it comes to energy production. Because of this, higher oil prices are probably going to be a fact of life for a while, at least as long as we have signs of an economic recovery.
The US dollar sliding in general will help oil as it is priced in that same currency, and it is going to take more of those same green pieces of paper to buy a barrel of oil. The 50-day EMA is currently sitting just below the $77 level, and it looks as if it is ready to continue going higher, and I suspect at that point it will offer a bit of a “floor in the market” near the $80 level. It is not until we break down below the $75 level that I would consider shorting this market, and I just do not see that happening anytime soon. I think it is much more likely that we will break above the $85 level and see a bit of momentum building in this market as we go looking towards the $90 level. I have no interest in trying to second-guess the momentum that we see on the chart, because everybody who has tried to has been run over.
