In my previous post on oil, I suggested bullish momentum was returning for oil when the commodity was trading at $57.96 per barrel, but with some resistance ahead. Since then we have seen the price continue to rise and currently trade at $59.51 at the time of writing. However, in the last few days we have seen two significant moves on the daily chart. The first of these was the gapped up open of Wednesday which propelled oil firmly higher on excellent volume, and second, and at the same time, through the very strong resistance which now sits below as a platform of support in the $58 per barrel region. This is, in fact, a cluster of two levels, one red and one blue and indeed looking to the left of the chart and the price action of February and March, we can see why. This was a level which was constantly tested and retested, building an ever stronger region of resistance which ultimately became support as oil continued to climb towards $67 per barrel.
All the levels on this chart are generated automatically by our Quantumtrading accumulation and distribution indicator for NinjaTrader, with the thicker the line denoting a strong region of potential resistance or support. So with this powerful support area now below, and with the trend monitor indicator having transitioned firmly to blue, the outlook for oil is now firmly bullish. Ahead we have some lighter price based resistance in the $61 per barrel area as denoted with thin red and blue dashed lines, which also coincide with a low volume node on the volume point of control indicator, so we can expect the price to move through here relatively swiftly and on towards the volume point of control itself at $62.60 per barrel. And like gold, any further weakness in the US dollar will help to provide oil with momentum.