WTI prices are trading above the 103.0 round figure once more. Prices were pushed higher by strong risk trends which saw major US stocks indexes clocking more than 1% gains each. The weekly report by the Department of Energy was bullish as well, indicating a gain of 4.03 million barrels week-on-week. This figure is much higher than the 0.75 million estimated by analysts, but a similar report by American Petroleum Institute raised expectations to 7+ million barrels instead, suggesting that the actual implied demand for WTI Crude is not as bearish as we once thought it was.
Nonetheless, it should be noted that prices weren't exactly bearish yesterday to begin with, even though the API numbers were atrocious. As such, it is no surprise that prices actually managed to ride on the DOE "bullish" surprise to break 103.0 resistance, and even though we've since suffered a slight pullback, it is likely that further gains will be possible especially if the risk trend remains positive during the US session later.
Hourly Chart
From a technical perspective, prices have rebounded from the lower wedge, which naturally opens up the upper wedge as a bullish target. Based on the current pace, it is likely that price will also be around yesterday's swing high when testing the upper wedge, and as such, if there is a break, we can expect strong bullish acceleration higher. The Stochastic indicator is also in favor of bullish endeavors as the Stoch curve has crossed the Signal line from below at around the 40.0 "support" level.
Daily Chart
The Daily Chart is less optimistic, with 104.0 round figure resistance looming overhead, while Stochastics have reached Overbought levels not seen since the March decline. Hence, there is a niggling suspicion that bullish momentum may have overstretched itself. Couple this with weak bullish fundamentals and it is difficult to imagine WTI prices being able to enjoy further bullish follow-through above 104.0
What should traders do when short-term direction does not truly agree with long-term direction? Conservative traders may simply opt to stand aside, but if traders limit their risk exposure, it is still possible to ride the short-term wave higher. Alternatively, long-term traders may find current prices attractive to short, but risk may be higher as there is no way to tell when bullish euphoria will end and certainly markets can stay irrational longer than we can stay solvent.