After reaching its highest level in three weeks and posting a higher close the week-ending June 12, August Crude Oil futures posted an inside move this week. Although the market is in a position to once again close higher for the week, the inability to take out last week’s high suggests yet more trader indecision.
The lack of upside momentum also suggests a possible shift in investor sentiment. Based on the short-term range of $64.12 to $56.88, it looks as if the next move will be determined by trader reaction to is 50% to 61.8% retracement zone at $60.50 to $61.35. Given the current set up on the weekly chart, a weekly close over $61.35 will be bullish and a weekly close under $60.50 will signal the presence of sellers.
For bullish traders, a sustained move over $61.35 could generate enough upside momentum to challenge the recent main top at $64.12. Taking out this top will signal a resumption of the uptrend. Two scenarios could take place if this occurs.
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The first scenario suggests that a breakout over $64.12 could lead to an eventual retracement into the major retracement zone at $72.75 to $78.42. The second scenario suggests a possible rally to $72.29 by the week-ending July 18.
A weekly close under $60.50 suggests a bearish scenario may be developing. If this leads to follow-through selling next week then look for sellers to go after the last swing bottom at $56.88. Taking out this bottom will change…