Having broken through resistance at $103.00 and tested the $104.00 earlier this morning, it’s no secret that the momentum has swung in favor of the bulls in this market. Heading into today’s session, $104.00 will be the key level of resistance to keep an eye on in crude. The price has rallied almost $5 over the course of two and a half days, a sizeable move by most accounts.
Has the market risen “too fast too quick” or will the fierce positive momentum continue to exert its effect on price?
How price reacts to the $104.00 level of resistance will likely hold the answer to this question. If price is unable to hold above this pivot, the market is vulnerable to a corrective pullback following the recent spike. However, if price is able to sustain a trade above $104.00, there are not many technical levels between $104-$105 to prevent price from rallying another dollar throughout the day or perhaps over the weekend.
Traders should closely monitor price action at the $104.00 level in order to identify potential trading opportunities. Keep in mind the recent positive momentum as well for those traders looking to sell a rally into the $104.00. If this is a strategy that you choose to implement, keeping aggressive stops above the highs would certainly be a prudent strategy. For more information on specific trading strategies in this market, I encourage you to contact me directly.
August ‘14 Crude Oil 30-minute Bar Chart (e-Signal)