Triple In Crude Oil?
It’s time again to take a look at the price of crude. We have definitive areas of support and resistance shaping up with resistance in the area around $82 – $84 and key support at the $70 level. The price of crude oil has touched that 82 – 84 level 3 times in the past 5 months creating a possible triple top situation. That doesn’t necessarily mean that the price of crude can’t breakout above $84 and test the $100 level, but it appears that situation is diminishing. However, a triple top only confirms if the price of crude breaks below $70. For now, we remain in the range and the chartists are waiting for a big move either way.
Let’s take a look at the chart..
Note the test of $82 in Oct 09, a test of $84 in Jan 2010 and a test of $83 here in March which defines the potential triple top. The pattern would be confirmed only on a break below that big support level at $70 tested in Dec 09 and Feb 2010. In my opinion, I think crude remains in that range for quite some time.
The wild card in all this is what happens to the US dollar and how does that effect the price of crude? Crude has been able to hold above the $80 level despite a strong rally in the US dollar. How much longer can crude hold the $80 level especially when you consider that the US dollar broke out again today and appears ready for another leg higher. If the price of crude doesn’t crack soon despite a dollar rally, that may setup a breakout move should the dollar go into correction mode. I’ll be keeping an eye on crude and will have another report in about a month. Stay tuned!