Crude Oil futures continue showing resilience after bouncing off support near the $80 a barrel level, and resuming the uptrend in sympathy with the continuation of the equities rally on Monday. This is possibly a confirmation that the strong Initial Trend reading will remain intact following last week’s false breakout to the downside. A near-term analysis of the market reveals the Pennant formation developing on the 30-minute chart, with strength entering the picture near the apex of this trading range. There will likely be at least a retest of the upper end of the Pennant in Wednesday’s trading, testing the resistance near $82.20. A failure at the top side of the Pennant would make for a viable set-up to re-enter short positions for a shorter term sell-off. Alternatively, in anticipation of the strength shown in the Quality of the initial trend, combined with the zero reading on the Breakout indicator, a close above the Pennant may warrant a change in timeframe for traders to revert to the rising channel on the 240-minute Channel Up pattern for more guidance (See the October 11 Daily Commodities Update for more on this pattern).

Source