More often than not, pullbacks will be thought of as buying opportunities, as there are plenty of value hunters out there willing to jump on this market that is so obviously bullish.
The West Texas Intermediate Crude Oil market pulled back just a bit on Monday to start off the week on the back foot. That being said, the market is still very bullish and there are plenty of buyers underneath willing to get involved. The market may have been a little bit overbought, and it appears that a certain amount of psychology comes into play at the $120 level.
Looking just below, the $115 level was the beginning of the top of the ascending triangle that we have just broken out of. I anticipate that there should be plenty of buyers in that region and that they will be more than willing to get involved if we do in fact pull back that far. I don’t know that we will, but it is something worth watching as it could very well be a nice buying opportunity.
Crude oil markets will continue to get a lift as long as the war in Ukraine continues, and perhaps more importantly, sanctions against Russian oil. While the Russians are most certainly selling oil to other places such as India and China, it does not affect the global market in the same way, because the swaps being done with those countries are more of a direct situation than out on the open market.
Regardless, you should also keep in the back of your mind that inflation typically means higher energy prices, so traders may just be playing that correlation as well. The market has been grinding higher for quite some time, and there’s not much to keep it from going to the recent highs, closer to the $130 level. Underneath, I see the 50-day EMA as a major support level, and if the market can stay above there, then it’s likely that there will be plenty of buyers involved given enough time. I don’t necessarily think we are looking at the situation where we even think about testing that, but that could be your “line in the sand” if you are trading this market right now. More often than not, pullbacks will be thought of as buying opportunities, as there are plenty of value hunters out there willing to jump on this market that is so obviously bullish. Oil remains a very strong market.
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