Crude futures have managed to pop above our important 3rd tier downtrend line and are currently toying with the psychological $75/bbl level. We highlighted the significance of our 3rd tier downtrend line in yesterday's analysis because it runs through previous 2009 highs. As a result, crude becomes the latest investment vehicle to send a strong buy signal. The EUR/USD has also separated itself from its key 3rd tier downtrend line and is flirting with the idea of testing 1.50. Meanwhile, gold is trading just below 2009 highs and the S&P futures are setting fresh ones. Therefore, crude's key correlations all continue to create an environment supportive of a new leg up.
Meanwhile, U.S. econ data and Q3 earnings have done their part thus far. Intel and JPMorgan both topped expectations today while U.S. retail sales came in strong than anticipated. Both are positive catalysts for crude and the S&P futures, particularly since an improvement in retail sales is supportive of a recovery in U.S. consumption. In addition to U.S. news, China reported stronger than expected export and import activity. China continues to import incredible amounts of iron ore, leading us to believe that the nation is adding onto its stockpiles of crude and gold as well. Hence, crude's fundamentals support its positive technical developments.
Technically speaking, crude faces topside barriers in the form of 8/24 and 8/6 highs along with the psychological $75/bbl level. Crude's technical barriers are clearly wearing thin and the next foreseeable obstacle would be the psychological $80/bbl. As for the downside, crude has technical cushions in the form of multiple uptrend lines along with consecutive higher lows (10/13, 10/9, 10/8). Additionally, the psychological $70/bbl level should work in crude's favor if it is tested.
Resistances: $75.06/bbl, $75.49/bbl, $75.86/bbl
Supports: $74.50/bbl, $74.10/bbl, $73.66/bbl, $73.24/bbl, $72.84/bbl, $72.15/bbl
Psychological: $75/bbl, $70//bbl