Crude oil [May contract] closed higher on Monday as it consolidated some of last week's decline. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term.
If May extends last week's decline, the 38% retracement level of the October-March rally crossing at 97.84 is the next downside target. Closes above the reaction high crossing at 108.70 are needed to confirm that a short term low has been posted.
First resistance is the broken October-February uptrend line crossing near 105.95. Second resistance is the reaction high crossing at 108.70. First support is today's low crossing at 102.06. Second support is the 38% retracement level of the October-March rally crossing at 97.84.
We continue to like the long term chart formation in crude oil, 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, this commodity is currently in a trading range.
With our monthly Trade Triangle in a positive mode, we expect that the downside pressure in this market has come to an end. Long term traders should remain long this market with appropriate money management stops.
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