Oil now developing bullish momentum
The daily chart for oil this year could best be described as lacklustre as oil prices have been in an extended phase of congestion, following the rally in early January, but today’s price action may be the portent of some bullish momentum developing in the near future.
So far in 2019, some key technical levels have been established delivering strong regions of both support and resistance, and the most recent of these has been the blue dashed line on the accumulation and distribution indicator in the $55.50 per barrel. These levels are purely based on price action and the thicker the line then the greater the number of times such as level has been tested. This level of resistance was tested in December 2018, and more recently in February 2019. In both cases the level was respected and the oil price reversed. However, in mid February this price level was finally breached, with the consequent reversal to provide a platform of support. Over the last few weeks, this level has grown in importance as the price of oil retraced to test it on several occassions, but holding firm on each occassion.
The key level now is at $58 per barrel, and today’s price action has been given a boost with the release of the weekly oil inventories from Cushing, which showed a healthy draw, and in contrast to the forecast build of 2.7m bls. Should this level be breached below we will have a further strong platform of support in place, helping oil to move higher in the medium term, and with light volume ahead on the VPOC histogram, progress through here should be relatively straightforward on strong and rising volume.
Looking further ahead to the weekly chart, here too the outlook is promising with only a low volume node ahead, and very little price resistance to hinger progress, and as such we can expect to see the price of oil regain the $60 per barrel handle and from there an extended move higher back towards the volume point of control itself which remains anchored in the $67.50 per barrel area and denoted with the yellow dashed line. Note too, the trend monitor indicator is also now transitioning to dark blue and should this subsequently change to bright blue, the reversal from primary bearish to primary bullish trend will be complete.
By Anna Coulling
Indicators from Quantum Trading and charts from NinjaTrader
Source: https://www.annacoulling.com/commodities/oil-now-developing-bullish-momentum/
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