Buying on dips should continue to offer value from what I can see, but we need something to offer a little bit of momentum as this market is simply chopping around.
The West Texas Intermediate Crude Oil market rallied a bit on Monday to kick off the week on the right foot. Furthermore, the market has broken through a major downtrend line, and it is likely that we could go much higher. We did give back some of the initial gains, but at this point it looks like we are closing well above the downtrend line. That suggests that we are going to continue to go a bit higher.
If we can break above the top of the candlestick, then I think it is very likely that the West Texas Intermediate Crude Oil market will go looking towards the $74 level. The $74 level is an area where we had seen a lot of selling pressure previously. With this, I think it is only a matter of time before we go looking towards that level as the market sold off there, meaning there is quite a bit of supply in that region. If we do break above that level, then it is likely that we will go looking towards the $75 level.
The 50-day EMA is slicing through the overall consolidation area underneath, so I think it does make sense that we would see traders taking a close look at the area as major support. In fact, as long as we can stay above the $67.50 level, I think you can only buy on dips and not short this market. However, if we were to break down below that level it is very likely that the market would go looking towards the $62.50 level, roughly where the 200-day EMA sits right now. The market breaking below there could open up the possibility of a move towards the $60 level.
Pay attention to the US Dollar Index because it does have a bit of an effect on this market, as the contract itself is priced in those very same US dollars. With that, I think we are trying to build up the necessary momentum to go higher, but the greenback might be one of the things holding us back. Buying on dips should continue to offer value from what I can see, but we need something to offer a little bit of momentum as this market is simply chopping around.