The West Texas Intermediate Crude Oil market has rallied ever so slightly during the trading session on Monday, although it should be noted that most major Asian and European banks were closed. Because of this, there may have been a little bit of a lack of liquidity, but the move during the trading session on Monday was simply a continuation of what we had seen previously. The oil markets have tested a major uptrend line and then bounced quite significantly.
If we were to break down below the bottom of the candlestick for the Monday session, then it is simply time to step on the sidelines and wait for some type of support to come back into the picture. The 50 Day EMA is sitting at the $99.64 level and rising, so that does suggest that perhaps there will be a little bit of support in that general vicinity. Furthermore, you need to pay close attention to the $100 level, because there is a certain amount of psychology attached to that number as well.
On the upside, if we were to break above the $110 level, it would be a very bullish sign and it could take off to the upside, perhaps reaching the $115 level. The $115 level being broken then opens up the possibility of a much longer-term move to the upside. I suspect that we could get a little bit of a pullback in the short term, but that should be thought of as offering value. In fact, it is not until we break down below the uptrend line that we would start shorting and going to the $90 level.
If we were to break down below the $90 level, then it is likely that we go looking towards the 200 Day EMA at the $84 level. Ultimately, this is a market that I think given enough time will have to make a bigger decision, but it is obvious that the buyers are starting to take over yet again.
