The West Texas Intermediate Crude Oil market has broken down significantly during the trading session on Thursday to test the bottom of an ascending triangle. The previous candles for most of the week have been hammers that suggests there should be plenty of buyers underneath. Ultimately, looking at this chart, even though we have broken down quite significantly during the trading session, it is worth noting that we bounced a bit from an uptrend line.

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The 50 day EMA also sits just below the uptrend line, so it makes quite a bit of sense that we would see plenty of buyers in that vicinity as well. Because of this, I fully anticipate that we will see buyers jump back in given enough time, as the markets are still trying to get long due to the “reopening trade”, and the idea that demand for crude oil will pick up as the world continues to see inflation and of course economies demanding more. The US dollar has been falling for a while, so if that continues to be the case, then crude oil will get a bit of a bounce as well.

To the upside, the $67.50 level should be an area of resistance, and if we can break above there then it is likely that the market could go looking towards the $70 level above. That is a large, round, psychologically significant figure that being broken to the upside would bring in even more money, as it is likely that we would see more momentum players coming back into the markets. On the other hand, if we were to break down below the 50 day EMA is likely that we could go looking towards the $60 level. I doubt that happens, but it is something that we need to pay close attention to.

Based upon the ascending triangle it is likely that we could go looking towards the $75 level are so, based upon the “measured move” from the height of the triangle. All things being equal, I do not really have an interest in shorting oil anytime soon unless of course the entire narrative of the reopening trade changes. I do not see that happening in the near term, especially as the inflation numbers are starting to pick up so that should continue to drive down the value of the currency, having people buying “things”.