Major Resistance At 104.48 In Crude Oil

Frank Ochoa
April 15, 2014

Crude Oil saw expansion through our 102.24 key level and rallied to new contract highs for the year at 104.55, reaching our 104.48 target in the process. Will 104.55 remain the high, or will we see 108.22 in the weeks ahead?

CL PREM 041414 1024x641 Major Resistance At 104.48 In Crude Oil
CL PREM 041414 1024x641 Major Resistance At 104.48 In Crude Oil

104.48 Target Achieved

In the April 8 edition of the Opening Print (Major Expansion is Ahead for Crude Oil) I wrote: “Crude Oil has trended higher for much of the year, so the primary expectation is for price to break through the 102.24 key level and rally to 104.48 (scaling target), followed by a secondary move to the primary upside objective at 108.22.”

Last week we called for Crude Oil [NYM:CLK14] to see expansion into the 104.48 level and that is exactly what we got. Price rallied through the 102.24 key level, which triggered the upside buy stops right into our scaling target at 104.48, nailing a quick 2-point move.

Not only was 104.48 reached, but it was only surpassed by 7 ticks before price went offered, leaving a new contract high for the year at 104.55. If price cannot rise beyond this level soon, we could see a near-term selling opportunity ahead of the next wave of strength toward 108.22.

104.48 is the Pivot

The daily chart shows Crude Oil broke through 102.24 and rallied into 104.48 and stopped on a dime. The footprint chart shows buy imbalances were absorbed above 104.40s the last two sessions, which suggests responsive sellers are attempting to keep a lid on 104.48.

If price breaks through 104.48, and gains acceptance above this level, the upside buy stops of the responsive sellers will begin to be triggered, which will likely influence price into the final target of our harmonic pattern at 108.22.

However, if buyers continue to be absorbed above 104.40, look for price to roll lower into 102.24 for a retest from above, with the potential to auction as low as MCVPOC at 101.30. If Crude Oil is going to remain bullish, responsive buyers will need to defend value at 101.30, especially if the 108.22 primary target is to be reached.

Otherwise, if price goes offered through 101.30, there’s a problem, and it could mean retesting 98.88 and even as low as 97 in the weeks ahead. First things first, watch the battle at the 104.48 pivot, which will dictate how price is likely to play out in the days ahead.