Is This Pullback in Crude Oil a Buying Opportunity?

February crude oil closed lower on Friday as it extended yesterday's breakout below the 20 day moving average crossing at 99.40. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, December's low crossing at 92.70 is the next downside target.

If February renews the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. First resistance is last Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is today's low crossing at 97.70. Second support is December's low crossing at 92.70.

The pullback in the crude oil market is setting up a buying opportunity once the downward momentum is over. A solid close over the $104 level is needed to drive this market to the $120 level. External world events can trigger moves in this commodity. With a Chart Analysis Score of +55, this market is now in a trading range. The crude oil market has major resistance at $104 and support at $97. Long and intermediate term traders should be long this market with appropriate money management stops.

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