Daily Oil Chart 3 August 2009
Following Thursday somewhat unexpected strong reversal in crude oil prices which created a two bar hammer, Friday’s surge higher was only to be expected and should teach me to trust my instinct, judgment and analysis, with the high of the day piercing the strong resistance immediately ahead. The upwards momentum in daily oil prices has been confirmed in early oil trading this morning along with the crossing of the 9 day moving average above the 40 which has also added weight to this early bullish move. With oil prices now powering higher, a breach of the resistance between the $70 and $72 price level should lead to an attack on our initial target of $75 a barrel which I have outlined several times in the past. Trading in oil is now a dollar play and with the Dollar Index increasingly fragile, as investors pile into equities and with commentators increasingly bullish about an economic recovery sooner rather than later, it is only a matter of time before we achieve this initial price level followed by a move towards $80 and above. Oil prices have also been boosted with comments in the media that oil supplies will begin to decline within the next decade and at a faster rate than had been anticipated. Peak Oil it seems has definitely passed. Overall crude oil prices opened Friday’s session at $66.69 and closed the session at $69.45 barrel. With reasonably healthy trading volumes my trading suggestion for crude oil is to look to trade the long side, buying on any dips on hourly chart.
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