The West Texas Intermediate Crude Oil market rallied a bit on Wednesday after initially pulling back. That is a good sign, but at the end of the day we are simply consolidating and digesting the gains from the parabolic move from last week. When you look at the chart, you can see that the $75 level offered quite a bit of support, as we bounced very hard from that level. At this point, I think that is what we are focusing on, validating a move above the $75 level.
Speaking of the $75 level, it is where we see the 50-day EMA currently reaching towards, so I think it does make sense that we would see the area attract a lot of attention if we do pull back towards it. I do not see that happening though, but it would be a great value in a market that is obviously very strong.
On the other hand, the $80 level could continue to offer plenty of support, as it is a large, round, psychologically significant figure and has attracted a lot of support over the last several sessions, and the fact that we have bounced from that area multiple times also lends more credence to the idea of the market eventually going higher. Remember, the supply of crude oil continues to tighten, and that will attract a lot of attention in and of itself. Beyond that, we have seen the US dollar get hit kind of hard, and that could help the value of crude oil rise as well.
We are also looking at the reopening trade right now, and that does suggest that perhaps we are going to continue to see crude oil rally based upon that. At this point, if we can break above the highs of the Monday session, then I believe this market will go looking towards the $85 level. That is obviously an area that would cause a little bit of psychological noise, but for now it will have to suffice as a target. To the downside, it is not until we break down below $74 that I would be concerned with the present trend and the potential of a change.
