Talking Points:
- Crude Oil Prices Consolidate As Volatility Subsides
- Daily Breakouts May Influence Longer Term Trends
- Crude Oil MVA Support is Found at $43.74
Crude Oil prices have failed to follow through on yesterday’s bullish advance as market volatility has at least temporarily subsided. Currently, if prices close at present levels, Crude Oil will conclude the session with the creation of an inside bar. If prices fail to move significantly to a new high or low, this suggests that traders may use yesterdays’ high and low to plan for the markets next breakout.
Resistance for Crude Oil may be found at Wednesdays daily high of $45.92. Alternatively, support is found at the low of $43.06. If prices breakout, traders may use this $2.86 trading range to extrapolate potential targets. This places initial bullish breakout targets at a Crude Oil price of $48.78, and bearish breakouts to target a move towards $40.20.
Crude Oil Price, Daily Inside Bar
(Created Using TradingView Charts)
Traders should note that a breakout in either direction will have a significant effect on Crude Oils 2016 trend. As seen below, a bearish breakout below $40.20 places Crude Oil prices back below the 200 day MVA (simple moving average). While the MVA itself is found at $43.74, a close below this point would suggest the beginning of a new bearish trend for Crude.
Alternatively, if Crude Oil breaks higher above $45.92, it would suggest that the 200 MVA is still an active value of support for the commodity. In this bullish scenario, Crude Oils prevailing trend may still be interpreted as up. This would allow traders to again target new 2016 yearly highs above $51.91
Crude Oil Price, Daily with 200 SMA
(Created Using TradingView Charts)
--- Written by Walker, Analyst for DailyFX.com
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