On a relatively quiet day yesterday in terms of fundamental news, markets were left to reflect on Friday’s NFP data and the statements from the ECB concerning the European economy, with many drifting at the start of another trading week.
The exception was of course the Chinese data overnight with the Trade Balance coming in at a healthy 35.9B against a forecast of 22.6B and building further on the positive trend of the previous releases. One of the markets which moved yesterday was Crude Oil, with the July futures contract gaining well over $1 per barrel on the news, and moving back to test the key resistance level at $104.50 per barrel once again.
The bounce higher was as expected following the pivot low delivered on the daily chart following last week’s test of the $101.50 per barrel region, but if this bullish momentum is to be sustained, then the $105 per barrel price point must be taken out on strong volume. If this does indeed occur, then expect to see oil prices continue higher in the short term with this solid platform of price support providing the springboard for a breakout and continuation of the bullish tone.
The volume at price histogram on the left of the chart is confirming the technical picture, and with the deep support area defined below between $100 and $103 per barrel, the commodity is now preparing to break away from the recent congestion phase, which if confirmed, should then see oil develop a longer term trend.