Crude futures are popping back above their important 2nd tier uptrend line as the Dollar depreciates heavily against the Pound. Investors are also encouraged by much better than expected EU Economic Sentiment data. A weaker Dollar and prospects of an uptick in demand from the EU are helping crude futures avoid a retest of their psychological $65/bbl level. We also can't ignore yesterday's surge in the Empire State Manufacturing Index. The increase in global production and shipment of goods are helping buoy the price of crude. The U.S. will release weekly inventories tomorrow, and it will be interesting to see if there is a larger than expected surplus once more. However, investors have been disregarding recent inventory surpluses with crude futures locked on the prospect of future consumption.
Meanwhile, crude futures are trading back above our 2nd tier uptrend line, which carriers some weight since it connects through July 30th lows. Another defeat of our 2nd tier uptrend line on rising volume could result in a retracement below crude's psychological $65/bbl level. However, crude futures are back in their safety zone as investors determine whether to take the S&P's pullback further. A larger leg down in the S&P futures would likely drag crude futures lower with them. Additionally, we notice the GBP/USD and EUR/USD are trading near their own psychological levels, 1.65 and 1.40, respectively. Hence, it seems the markets are at a critical juncture. Are we merely witnessing profit-taking, or the beginning of a more meaningful decline? For the time being, crude futures have our 1st and 2nd tier uptrend lines to rely on along with intraday lows. As for the upside, crude futures must deal with our 3rd tier uptrend line, July 27th highs, our 2nd tier downtrend line and of course their psychological $70/bbl level. Hence, the topside is riddled with obstacles.
Resistances: $68.17/bbl, $68.53/bbl, $68.96/bbl, $69.68/bbl
Supports: $67.41/bbl, $67.15/bbl, $66.76/bbl, $66.47/bbl, $66.13/bbl
Psychological: $70/bbl, $65/bbl