CF: Crude Oil – Monday Highs Likely to Soon Become Visible Again
Yesterday, we pointed out how historical the recent run off the lows was, matching or exceeding some of the largest short-term rallies in oil, ever. We also mentioned that a vigorous pullback could unfold soon due to the extended nature of the squeeze higher. Soon turned out to be same-day soon.
Often times after you see these types of sharp reversals from multi-month or year highs or lows and then a retracement, a thrust back in the direction of the sharp reversal will occur. This will then generally lead to at least a test of the recent swing high/low, if not marking the resumption of what will become a new trend.
In this case, the high and close from Monday at $49.30 and $48.03, respectively, should come back into visibility once the retracement which began yesterday concludes. What we would like to see is a 50-60% retracement of the super squeeze ($42.50/43.50), then find footing and turn higher. We could be there today or tomorrow.
This should at least set us up for a move back towards the upper end of this week’s highs, with greater potential up to a trend-line running back from June of last year down over the peak created in June of this year. This level currently resides over $51, but will continue to slope lower the further we move along.
