The price of global crude oil once again reached $100.00 per barrel and has been trading in that area more roughly more than a week now. Will it continue to go higher? Let us see.
In my last post on WTI crude oil last February 1, 2011 (kindly see it here), it was only exchanging at around $92.84 per barrel. However, it was already trading within a right angled and broadening descending triangle formation therefore a breakout from such could swing it all the way to $100 dollar per barrel. Three weeks after, on February 21, the breakout happened when it pierced right through the $92.50 resistance. The move was also boosted by a bullish breakaway gap that occurred the day before. WTI crude oil eventually reached its minimum price target of $100 per barrel and even peaked at $103.40 on February 24. Since then, though, crude oil, somewhat eased and is now just trading just above $100.00.
Given its overbought condition, as indicated in the stochastics, crude oil could consolidate and move sideways for awhile before either swinging north or south. The bullish breakaway gap that occurred weeks ago, however, suggests that move higher is more likely. You see, a bullish breakaway gap is usually followed by another gap in that direction, a runaway gap. That has not occurred yet. In any case, a break of last week’s high could send it towards $110.00.
When the price of oil becomes more expensive, it’s generally bearish for the markets because oil or the “black gold” is considered as the blood that flows in the global economy. Majority of the industries in the world run on oil or other petroleum products. Therefore, an increase in its price would make business for these industries more expensive as well.
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