We have gotten here rather quickly, so a little bit of a pullback or at least sideways action could make a bit of sense.
The West Texas Intermediate Crude Oil market has shown itself to be positive again during the trading session on Thursday as we have broken above the $81.40 level. However, we have not broken above the top of the shooting star from the Monday session, and that is what we need to see in order to continue going higher for a bigger move. I do think that happens, but we have been consolidating for a while in order to digest the massive gains that we recently have had.
That consolidation does suggest that we are trying to build up the necessary momentum to go higher, and it is probably worth noting that the market at least closed higher than it has the last three days, so I think it is probably only a matter of time before we go higher. The market has shown itself to be heavily defended just below the $80 level, so if we get some type of pullback in that area, I would be more than willing to get long yet again in what has been a very strong uptrend. I have no interest in shorting crude oil, because quite frankly this is a market that will continue to see plenty of value hunters.
The $75 level underneath offers support, as it had previously been resistance, and therefore the market should continue to look at that as a “floor in the market”, especially as the 50 day EMA is starting to reach towards that area. All this tied together tells me that any pullback that occurs should simply be an opportunity. For that matter, the $77.50 level could be an area of support also.
The crude oil market continues to see a very tight supply worldwide, and therefore it is likely that we will continue to see plenty of buying pressure to the upside over the longer term. Furthermore, there is a serious press to get energy around the world and we have started to see more in the way of demand from various continents, and that should continue to push to the upside. I think given enough time, the market is likely to go looking towards the $85 level, perhaps even to the $90 level over the next several weeks. That being said, we have gotten here rather quickly, so a little bit of a pullback or at least sideways action could make a bit of sense.