Over the last week or so we have seen the price of oil retrace, but the pullback on the daily chart has simply been a minor correction in the longer-term bullish trend and as such the $85 per barrel price point remains firmly on the horizon.
This short-term reversal lower was as expected following the weakness signaled on the 25th of October with the market struggling to move higher on excellent volume and closing with a typical shooting star candle which duly confirmed the sell-off. However, note the two candles of the 28th October and the 29th October. On both days, the price of oil fell, but then recovered to close higher on the day and end with a deep wick to the lower body on excellent volume. And in fact, the price action of the 29th October opened gapped up to add further weight to the bullish momentum with a repeat performance. The first day of the new trading week and of November opened was muted but once again with the commodity heading upward to test the $85 per barrel area, and currently trading at $83.50 per barrel at the time of writing. The $85 per barrel level is the key one moving forward and if this is breached on good volume is likely to provide the springboard for a further leg in the bullish trend.
By Anna Coulling
Charts from Ninja Trader and indicators from Quantum Trading
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