Bulls Looking for 100 in Crude

Crude Oil sees expansion from 8-day range, approaches prior value at 96.76 with 100 in view.

Narrow Range Breakout

Crude Oil [NYM:CLK14] traded within a narrow 8-day range before finally seeing expansion Friday on the last trading day of August. The break through the top of the range at 94.57 triggered the upside buy stops of the sellers that had been absorbing demand at 94.57 in hopes of keeping it offered as resistance. Meanwhile, bulls quietly kept composite VPOC (CVPOC) bid at 93.53 ahead of the upside squeeze, which was a huge tell the last few sessions.

As a matter of fact, look for 93.53 to be bid on the first retest as well, as is usually the case after the bulls score a win.

Generally speaking, expansion from a narrow price range usually intensifies the resulting price move. In essence, we could see swift upside follow-through in Crude ahead, likely to prior value at 96.76, especially if price remains above the breakout point of 94.57.

CL 090114

The Game Plan

Given the recent upside break, the expectation is that further strength will be seen toward prior value at 96.76, which is the next high volume node (HVN) above. Any pullback into prior resistance at 94.57 will likely be defended by responsive buyers eager to convert the level to support ahead of a potential wave of strength to 100.

The fact that Crude reached 6-month lows has bulls thinking snap-back rally, making 99 to 100 a key zone to watch above.

Sellers will look defend prior value at 96.76, as this level was offered the last time the market traded there. If sellers successfully defend 96.76, there will be a big test at 94.57 below, as the bears will be looking to run the stops below this level in order to fuel a move to the next downside expansion target at 90.91.

Cheers!

Frank Ochoa

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