So far this year the price of oil has continued its upward trajectory, with both Crude Oil Brent and Crude Oil West Texas currently at highs not seen since 2014. This month has seen price break through key resistance levels at $86.00 (Brent) and $85.00 (West Texas). Importantly, this week price has retested and stayed above these levels, as shown on the daily chart of West Texas below. With price remaining above these key levels, which are now acting as support, there could be potential for a continued move upwards. This could yield some high reward to risk buying opportunities for trend traders, on the daily timeframe or on an intraday basis.
Zooming out to the weekly timeframe below reveals two further resistance levels at $97 and $110, which could be used as potential target areas.
Returning to the daily chart below, the price action of higher highs and higher lows can be seen, demonstrating an uptrend. The moving averages (MAs) are aligned and showing good bullish geometry, with the 10, 20 and 50 MAs in the correct order and pointing upwards in the direction of the uptrend. There is bullish convergence between price action and the MACD and RSI indicators, suggesting there could be strong momentum to the upside. A long trend trading opportunity could occur on this timeframe if price pulls back down to the buy zone in and around the 10 and 20 MAs, and a small or medium sized bullish candle prints in this area.
Looking at the lower timeframes to find potential trading opportunities may offer the benefit of finding a higher reward to risk opportunity than trading on the daily timeframe. On the 4-hourly timeframe below the uptrend is just beginning to resume after a period of retracement, with higher highs and higher lows in price action and bullish moving average geometry. The retracement also shows a period of bearish divergence of the MACD and RSI momentum indicators, but again these are starting to converge with price, indicating that there could now be further momentum to the upside. A pullback down to the MA buy zone, and a small to medium sized bullish candle printing in this area could indicate the beginning of a further move up. With some distance still to go to the aforementioned resistance levels at $97 and $110, the reward to risk on any buying opportunities along the way could be very favourable.