The crude oil markets continue to see buyers on Monday, as we are now pressuring the significant ceiling in the market, and as a result, this is a scenario where I think a pullback might be necessary.
The crude oil markets rallied again during the course of the early hours on Monday as the West Texas Intermediate crude oil markets reached the $78.50 level, an area that has been somewhat resistant. When you look at the chart, it does make a certain amount of sense that the bullish traders continue to look at this W pattern as a signal that we might go higher.
Short-term pullbacks are most certainly possible in this area though, as we are a little overstretched, but I look at those pullbacks as buying opportunities and perhaps an attempt to build up the necessary inertia to break out. The 200-day EMA is sitting right around the $74 level and should offer significant support. And that assumes that we can get anywhere near there, which I don’t know that we will.
Brent markets have pierced the $80 level and you’ll notice on the chart that I have a line at not only $80, but also $81, because there is a zone of resistance. At this point, we are stretching to try to get through the last vestiges of resistance. And I think a lot of damage has been done to the selling pressure there. But whether or not we’re ready to break out remains to be seen.
This looks like a market that probably pulls back, but that should offer a bit of value. The 200-day EMA is right around the $77.80 level. So, I think that could be a certain amount of dynamic support as well. I’d be looking to buy dips. I do think crude oil is going to be a big story in the first half of 2025, and there’s nothing on this chart that suggests I’m wrong so far.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.