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Asset Watch
Monday, June 6, 2022
As expected, traders reacted and sent WTI soaring to nearly $120 per barrel. That lead to profit-taking, which resulted in crude dropping to nearly $114 per barrel.
So how should traders view the market now?
WTI certainly appears to be in an uptrend, and higher prices are currently the path of least resistance. For example, crude’s 10-day moving average has crossed its 20-day moving average from below. And the last three times the bullish MA cross occurred, crude’s rallies lasted two months or more. Therefore, with the most recent cross occurring on April 26, we may only be halfway through this medium-term rally.
As a result, it’s an interesting set-up. If crude can recapture $116.82 – a level that coincides with the late March and May 2022 highs – there is little technical resistance on the way to $130. Likewise, if a pullback occurs and the 10-day MA ($111.43) and 20-day MA ($109.10) hold, a breakout above $116.82 seems more likely than not.
So will the fourth time be a charm?
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