By Russell Glaser – Spot crude oil has shown a propensity to range trade between Fibonacci levels but a recent rally may have momentum behind it to break the sideways movement.
Since the end of May spot crude oil prices have moved in trading ranges between the Fibonacci levels from the May high at 87.12, unable to breakout into a defined trend in either direction.
A recent sharp appreciation in the price may have the ability to carry the price of spot crude oil past a significant resistance level into a breakout play. The resistance level lies in a range between the 76.4% Fibonacci level at 82.40 and the August high of $83 (R1). Should the price make a close above this level, the next target for spot crude oil would rest at the May high near $87 (R2).
Traders should be patient and wait for confirmation of the breakout before initiating a long position. A protective stop should be placed near the support of $80 to defend against a false breakout.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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