The June crude oil market rallied every day last week. The market put in higher lows and higher highs on a daily basis after it tested the support trendline (#3 on the chart) last week on Monday morning. Any technical trader would say last week had all of the necessary ingredients for a bull run.
On Monday crude oil was under pressure following unfavorable reports out of Spain and the United States coupled with profit taking ahead of a Labor Day Holiday in Europe and Asia.
The selloff seemed to be targeting the dominant trendline and the 20 day moving average (#1 on the chart) above the highs on the daily chart that kept Crude Oil in a downward channel until Thursday of last week when it closed above. This line was the dominant resistance for months, and may be the dominant support if the market can stay above in the near term.
If oil does not sell off any further, the near term target would likely be a price of $105.50. This price is where the high price from April 17th and the upper resistance trendline will converge on the chart (#2 on the chart). Closes above this number should be seen as a very bullish signal.
Any closes below #3 on the chart would likely invite heavy selling pressure on the June crude oil, as it would signal a break in the support trendline that the market has held since December 2011.
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