Signs of Strong Demand
Nonetheless, the behavior of crude oil the past couple of days shows demand remains strong. Yesterday, crude oil pulled back to find support at the 200-Day MA and bounced. Notice that the 200-Day MA was shown as resistance on two days last week. Once it is successfully tested as support the rising trend may be ready to proceed. Buyers took back control today, as a higher daily low was established and today’s closing price looks likely to be in the top third of the day’s trading range. Moreover, crude oil looks set to end Tuesday’s session at its highest daily closing price since the beginning of February.
Multiple Signs of Strength
Strength was also shown during the rally on a bullish reversal signal that triggered above the lower swing high at $72.49 last Friday. The breakout was confirmed by a daily close above that level on Friday. Today’s closing price above that level will further confirm strength. In addition, a solid top downtrend line was broken over the past few days.
That breakout will likely be confirmed by today’s closing price above that level. What this shows is that demand for crude oil remains strong. Therefore, a breakout above last week’s high of $76.29 could occur before a deeper pullback. If it does, the lower swing high at $80.76 marks the next upside target.
Double Inside Days
The 200-Day MA remains key near-term support crude oil. If prices stay above that line, the potential for a new high breakout remains. So far, the pattern that has developed is a double inside day. This shows diminishing volatility as the trend takes a rest and gains are digested. Typically, similar patterns can lead to a bullish continuation signal. However, given the wide trading ranges of the past few days, a breakout above the $76.29 high could see another spike in volatility.
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