Crude oil talking points:
- It’s been a big year for crude oil and more recently it’s taken out a number of key resistance areas.
- Prices now remain close to near seven-year-highs with oil grasping on to the 80 handle for support. Can bulls continue to push or is a pullback nearby?
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
Oil prices have continued to rip, continuing what’s become a very strong performance in 2021. Oil prices are currently up more than 60% this year as a number of resistance levels have been taken-out.
In early-May, I wrote about a brewing showdown at a big spot of resistance. Later in the month, that breakout was gearing up and I highlighted the setup in an Analyst Pick on May 27. That breakout cleared and a couple of weeks later, crude oil prices were testing over the 70-handle. And by July, another major area of long-term resistance was coming into play around the 75-handle. That resistance held in July and crude oil prices pushed all the way back down to 61.36, which is where the prior May low was set on August 23rd.
Crude Oil Monthly Price Chart
Chart prepared by James Stanley; CL2 on Tradingview
In the six weeks since, however, crude oil prices have been in the midst of a one-sided move. To be sure, the situation has had some assistance on the fundamental side but at this point the move appears to be getting frothy as oil prices are now finding resistance at the psychological level of 80.
To learn more about psychological levels or Fibonacci, check out DailyFX Education
Crude Oil Daily Price Chart
Chart prepared by James Stanley; CL2 on Tradingview
Crude oil shorter-term
Is a pullback or perhaps even a reversal certain just because prices have become entangled at a new spot of resistance whilst remaining at least somewhat overbought? No, prices can become even more overbought and psychological levels do not directly spell doom-and-gloom on a chart.
As a matter of fact, on a shorter-term basis there’s even been some healthy construction in this trend, as prices pulled back to test support at prior resistance (the blue zone below) before jumping higher on Thursday and Friday of last week.
This does mean, however, for those that want to jump on the trend they’d likely want to keep a short-term vantage point as there’s very few nearby swing-lows to use for stop placement. For those that are comfortable waiting for a pullback, even if that risks missing the move, there’s a couple spots of support nearby at 78.41 and 77.17, and below that is the big zone of longer-term prior resistance that’s already seen a few tests, and this runs from 75 up to 76.72.
Crude Oil Four-Hour Price Chart
Chart prepared by James Stanley; CL2 on Tradingview
--- Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
