The WTI Crude Oil markets initially gapped lower at the open on Tuesday, but found enough support near the $105.50 level to bounce significantly. Because of this, it appears that we are staying within the consolidation area that we have been in for some time. I believe ultimately that the market will go higher, as was shown during the session on Tuesday. Remember, the ascending triangle broke out at roughly $105, so it makes sense that the buyers stepped back into the marketplace in this region as well.
Ultimately, there are a lot of participants that would have been caught by surprise on the breakout, and those who found themselves losing money would have gladly taken a small loss near the $105 level, pushing the market higher. On top of that, a lot of buyers that stepped into the marketplace would have missed out on the initial move, and now it is obvious that being long was the only direction to be in the first place.
Watch the headlines, they’re out there and they will move this market.
Ultimately, I believe that the measurement from the ascending triangle is correct. The measurements suggested that we were going all the way to the $113 level, and ultimately the market will continue to be a “buy on the dips” type of situation. The market should offer plenty buying opportunities going forward, and because of this I remain very bullish. I believe that the situation in Iraq will continue to be one of the headlines that can push this market much higher. On top of that, I also believe that demand is starting to pick up for crude oil in general, so that of course will help.
I really don’t see a scenario in which I want to sell this market place. If I have to make a level important enough to start selling at, it would have to be a break below the $102 level, as it is the site of a massive hammer from earlier this month. I don’t see that happening, but if it did it would finally show the upward momentum being completely broken. I believe that we will see the $110 level during the summer.
