In the past week, WTI crude oil futures affirmed a rising trend since the beginning of the year that tells us this is still a dip-buying environment.
In mid-February price broke out from a large double bottom defined by the lows in November and January. After extending gains initially, price suffered a pretty steep pullback in March. WTI fell back into the area of the double bottom but not very deeply so or for very long.
The recovery since mid-March has been fast and frenzied. In the past week, WTI surpassed the high reached in early March, affirming the uptrend since the start of the year. Granted, price hasn’t managed to hold onto gains very well at higher ground. But odds favor further gains.
Note the churning that took place leading up to the highs of the past few days, without any sustained decline in price. That usually means a lot of supply is being absorbed as weak hands sell at a technical resistance level. This is a subtle message that tells you resistance is likely to fail, and that you should stay focused on the long side of the market (I’m referring to a position trader’s time horizon of about two weeks to a few months).
