March Crude Oil futures closed over $100.00 per barrel this week without much fanfare. The rally took out the previous top from December 2013 at $100.79, but fell short of the October 2013 top at $101.81. The failure to breakout to the upside suggests the move through the previous top was generated by buy stops.
The lack of fresh buying on the breakout is understandable since crude oil took a long time to reach this breakout level as well as traveling a great distance from $91.47. Frankly, while traders have to respect the move and its potential impact on prices, speculators do not seem too interested in buying strength unless there is some fundamental reason to chase the market higher.
At this time, there doesn’t appear to be a major fundamental reason to continue the rally. However, unless traders wake up next week and see that the bids are gone and that sellers are stepping in, the market may not break either.
Technically, the market is moving higher at a pace of $2.00 per week from the $91.47 bottom. In order to maintain this pace, the market must reach $103.47. If it doesn’t trade this level then this would be a sign that upside momentum is slowing. This would be the first sign that buyers are beginning to back away.
The weekly chart indicates there is plenty of room to the downside since the nearest uptrending support angle is at $97.47 this week. A pull-back into this angle while representing nearly a $3.00 sell-off,…