The West Texas Intermediate Crude Oil market pulled back just a bit on Tuesday as we continue to see a lot of consolidation in this market. Regardless, there does seem to be a lot of buying pressure underneath, and it does suggest that every time we pull back there will more than likely be buyers willing to step in and push this market higher. The 50-day EMA sits just above the $100 level, and I think a lot of people will look at that as a potential support level.
If we were to break down below there, then it is possible that the uptrend line from the massive triangle could offer plenty of support. In general, if we break above the shooting star from the Friday session, it opens up the possibility of a much bigger move to the upside. At that point, we would break above the $110 level, and go looking to reach the $115 level.
If we were to do the upward movement, then the market could continue the overall uptrend, which could therefore bring in even more momentum. Keep in mind that there are a lot of concerns about Russian oil, and that will be reflected in the market. The market breaking above the $115 level could send the market much higher, perhaps reaching as high as the $130 level.
If we were to turn around and break down below the uptrend line from the bottom of the triangle, then we could see this market break down to the $90 level. That being said, the market is more likely than not going to continue to see buyers on dips, as we have seen for quite some time. The “measured move” of the triangle could be back to the highs at $130, but I do not think it will make it there easily. It certainly looks as if we have seen a lot of upward pressure in the short term, so I think it is probably only a matter of time before the buyers overwhelm the entire situation. The US dollar strengthening could cause a little bit of downward pressure, but at the end of the day it is only a sideshow, so I think both could rise at the same time over the longer term.
