BLBG:Crude May Use Resistance as ‘Springboard’: Technical Analysis
Oil may add to this year’s gain after testing prior resistance yesterday and using it as a bullish “springboard,” according to technical analysis by Auerbach Grayson & Co.
Futures settled above $104 a barrel on Feb. 21 for the first time since May, forming a new support for the contract, said Richard Ross, an analyst at the New York brokerage.
“This completed a nine-month complex head-and-shoulders bottom, which holds the potential to propel prices significantly higher,” Ross said in a telephone interview. “We successfully retested the old resistance on the pullback to $104, which has created a textbook buying opportunity.”
Crude oil for April delivery rose $1.46, or 1.4 percent, to settle at $106.16 a barrel yesterday on the New York Mercantile Exchange. Futures dropped to $104.35 during yesterday’s session, the lowest intraday level since Feb. 21.
Crude oil in New York is up 7.4 percent this year and the Standard & Poor’s 500 Index has gained 7.6 percent.
“It took oil rising to $147.27 back in 2008 to help put a brake on growth,” Ross said. “Absent a spike of that magnitude, crude prices and equities should remain positively correlated and we believe that the strength of crude should have bullish implications for both the global growth story and stock prices.”
To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
