Crude oil triggered a weekly upside breakout on Thursday, as it rallied above last week’s high of $64.05 to reach a high of $64.72 for the day and week as this week is a shortened trading week. Moreover, the breakout may be confirmed with today’s closing price if it is above last week’s high. At the time of this writing crude continues to trade near the highs of the day and is likely to close bullish, in the top third of the day’s trading range. Today’s advance also broke through a 50% retracement level at $63.86, which was an area of resistance during last week’s bounce.
Counter-trend Rally in Play
Given the sharp five-day decline to a low of $55.23 that ended last week, there is a strong case to be made for a sharp countertrend rally as well. Crude oil fell by $17.25 or 23.8% following the April 2 high of $72.49, measured to last week’s low and the low of the bearish correction. It has been consolidating off that bottom until the upside breakout that triggered today. Certainly, there can still be some backing and filling within this week’s price range of $60.40 to $64.72, before an advance might continue.
But this week will end with a higher weekly high and higher weekly low, a sign that buyers are stepping in more aggressively than they have recently. Furthermore, today’s bullish advance follows a bullish outside day from Wednesday, another bullish sign. Traders and investors will likely see short-term weakness as an opportunity given the new bullish signals in crude oil.
