A very pretty picture on the daily WTI futures chart for oil bulls last week which saw the commodity surge higher in an inverted “waterfall” with the price action posting a series of widening spread candles in a rising market.
This price action was much as expected and was the result of a confluence of both technical and fundamental factors which helped to drive the commodity firmly through the $100 per barrel level, testing the $104 price point as a result in yesterday’s oil trading session.
Last week’s move higher was firmly supported by strong and rising volume, further validating the bullish momentum, and with relatively thin congestion now ahead we can expect to see oil prices move firmly higher in the short term.
Yesterday’s narrow spread down candle was associated with above average volume, and given the closing price coupled with the deep lower wick, suggests this was a minor phase of profit taking.
From a fundamental perspective the ongoing unrest in Egypt is certainly a contributory factor, and that seems likely to continue to play its part in the current move higher for oil and given the strong technical picture, we may even see a re-test of the $110 per barrel high of March 2012, now that there is a strong platform of support at the $100 per barrel price point.
By Anna Coulling