Last week’s price action for oil was another market where a strong technical picture is now developing as bullish momentum for the WTI August contract remains firmly in place and here again, it is Friday’s price action which delivered the significant break, with the candle breaking through strong resistance above the $34 per barrel region and denoted with the red dashed line of the accumulation and distribution indicator for NinjaTrader. The indicator presents these levels as thicker or thinner depending on the number of times a level is tested and holds, so the thicker the line the stronger the region.
This was the fifth straight week of gains for crude oil. Equally important, the price is now attempting to break away from the volume point of control which sits firmly at $32 per barrel and with a low volume node now on the horizon, oil looks set to make further gains in the near future and on towards this level at $37 per barrel.
From a fundamental perspective, two issues will dominate. First, whether the current supply agreements continue to hold although cracks are already starting to appear. Second whether there is likely to be an uptick in demand. Both are fragile and have the potential to derail the longer-term bullish sentiment, but for now, $37 per barrel looks set to be the next target.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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