We believe the low that was seen on Thursday, which has good support at the $104 level, is a cyclic low similar to what occurred in early February and the middle of December. If that is indeed the case, we would expect this market to start moving higher next week. We continue to like the chart formation, which we believe will eventually push this market higher until early April.
We are looking for crude oil to make its highs probably somewhere in the April, May period. With a Score of -60, we believe this market is regrouping to move higher later in the month. With our monthly Trade Triangle in a positive mode, we expect to see further gains in crude oil. Long term traders should be long this market with appropriate money management stops.
Crude oil [April contract] closed higher on Friday as it extends the trading range of the past two weeks. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain neutral to bearish hinting that a short term top might be in or is near.
Closes below last Wednesday's crossing at 104.35 are needed to confirm that a short term top has been posted. If April renews this winter's rally, the 2011 high crossing at 114.09 is the next upside target.
First resistance is this month's high crossing at 110.55. Second resistance is the 2011 high crossing at 114.09. First support is Thursday's low crossing at 103.78. Second support is the reaction low crossing at 97.73.
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