Crude oil (NYMEX:CLN14) is trading inside a huge sideways pattern that has begun in early 2010.
It is expected that the movements will be kept locked in time until the medium-term sideways move is completed. A break above the previous highs between $ 110.70 and $ 115.40 will encourage new bullish rallies toward higher areas around $120-$125 and even more ambitious zones afterward.
The short- and medium-term support areas to look for are between $104.00-103.30, next to the 50-day average and lower short-term bullish channel from where the uptrend should be resumed. Otherwise crued oil will remain vulnerable to extend losses back to the area of $99.00-$97.25, near previous lows and key medium-term support. The previous lows area of $84.30-$76.50 mark the long-term support that defines seideways trading.
We will remain cautious until crude overcomes its current obstacles before we speculate on more bullish rallies towards higher levels.