If you are looking for a little bit of value, you may look for a pullback and a short-term chart.
The West Texas Intermediate Crude Oil market has rallied again during the trading session on Thursday, as we have broken above the $79 level. At this point time, the market still looks as if it is going to be a “buy on the dips” situation, as we have been very bullish for a while, and it is likely that any pullback at this point in time will attract value hunters. Furthermore, it is worth noting that the 50 day EMA is down at the $74.86 level, and it looks as if it is starting to turn higher, showing that we are building up pressure.
OPEC is still on track to increase production, but there are a lot of concerns in places like Libya and Nigeria as to whether or not production can actually pick up. Because of this, the market is likely to see less production than originally thought, and if that is going to be the case it is very likely that we will continue to see prices rise despite the fact that in theory they should be falling. It is also worth noting that the energy markets are diverging, as natural gas continues to fall significantly.
If we were to turn around a break down below the 50 day EMA, that would obviously be a very negative turn of events, perhaps opening up the possibility of a move down to the $73 level. The $73 level was an area that had been significant resistance previously, so it is not a huge surprise to think that the market would find that as support going forward.
On the other hand, if we were to break above the $80 level on a daily close, it is very likely that we will continue to go towards the $84 level above which has been important in the past. Keep in mind that the market will continue to see plenty of people chasing the momentum, as it is obvious that crude oil was going higher and not lower. The size of the candlestick is somewhat impressive during the day on Thursday, and typically candlesticks that show this type of momentum do get a bit of follow-through. Nonetheless, if you are looking for a little bit of value, you may look for a pullback and a short-term chart.