Brief Crude Oil Update
The Crude Oil story is really starting to get a lot of attention from the media, and all of this is occurring at the same time crude oil is right at the 55 retest level combined with a very overbought RSI level near 80. That combination of factors usually means some sort of pullback or consolidation is way overdue.
In fact, as I think back over the years it always seemed to be the case that when the media was pounding their fists on the table about a particular market index or sector, the RSI level was typically at a very overbought level. Surely this is no coincidence, just standard protocol. The public/media versus the market, which one would you rather follow? I am sure you are thinking the market itself. Price action itself is indeed always the best guide.
The Crude Oil Chart
Looking at the price chart of crude oil you can see a good looking and very symmetrical reverse head and shoulders technical analysis pattern. Crude Oil Futures successfully broke upwards through the neckline with a sign of strength and have as you already know trended towards the retest level of 55. The two blue horizontal lines define the trading range or major resistance and support levels, in this case 55 as resistance and 40 as support. In terms of the Wyckoff Method, 55 is the 'creek' and 40 is 'ice'. It is not unusual at all after a breakout upwards through the neckline of a reverse head and shoulders pattern for the stock or future or whatever it may be, to return back to the neckline for a retest. In fact I expect this to be the case in the weeks ahead. This is a very very common occurrence and I would not be at all surprised to see it happen with crude oil futures. The alternative scenario is that crude oil holds here and hugs right under the longer term resistance level of 55. If this continues to be the case then it could imply a breakout of 55 sooner rather than later. For now though I will stick with the retesting of the neckline scenario. Another small hint is the price action of many oil and gas stocks this week. Plenty of pullbacks and consolidating from recent vertical moves.