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March crude oil met resistance at $101.9 when prices rose to $101.84 on Tuesday. Subsequently, prices pulled back to $100.28 and support held at the $100.1 midpoint of Monday’s candlestick. The bias is positive and the technicals show that the move up should ultimately overcome $101.9 and extend to at least $103.5.
That said, a daily evening star setup and bearish intraday divergence setup indicate the correction from $100.9 may extend early tomorrow before the move up continues. First support is $100.1 followed by $99.3. The $99.3 level is expected to hold. A close below this would call for $97.9 and lower.
Retracements
For the past two days March has closed over the 62% retracement from $103.9 to $95.44; this is positive and indicates the move up should continue. The 78% retracement was nearly met on Tuesday when prices rose to $101.84. This is a highly confluent resistance level, which is a reason why the pullback from $101.84 may extend before the move up continues.
CLH12 Retracements to $95.44
The 21% retracement from $95.44 to $101.84 was taken out when prices fell to $100.28 on Tuesday afternoon. March closed above this level, and support just below this at $100.1 is holding. A move back below $100.5 and then $100.1 early tomorrow morning would call for the 38% retracement of $99.4 to be met. This is crucial near term support that must hold if the move up is going to continue within the next few days. A close below $99.4 would call for the 62% retracement at $97.9.
CLH12 Retracements to $101.84
Candlestick Review
The daily candlestick chart below shows March breaking higher out of a bullish flag. The break higher is positive, but the bearish evening star setup that formed Tuesday indicates a deeper pullback towards the upper threshold of the flag will likely take place before the move up continues. The completion point for the evening star is $100.1 and the confirmation point is near $99.4
CLH12 Daily Candlesticks
Review of Momentum Status
The RSI, Slow Stochastic, and KasePO show that the move up will likely continue. However, a bearish divergence setup on the KaseCD, a faster moving and more sensitive indicator, shows that the move up may stall and a deeper test of support take place before the move up continues.
CLH12 Intraday Momentum
Kase Comments have been provided to you by Kase and Company, Inc. CTA. Written by Dean Rogers, AP and edited by Cynthia Kase, CMT, MFTA. See www.kaseco.com or contact Dean Rogers at 505-237-1600 for further information or a free trial of Kase’s premium weekly technical forecast on crude oil and natural gas.
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