As I suggested in my last analysis for crude oil, the short-term congestion duly arrived around the $76/$77 per barrel, but this weakness was quickly snuffed out as the big operators returned to buy on Oct. 7, with oil rallying sharply off the intraday low of $74.96 per barrel and closing the session at $78.30 on good volume.
This merely served to confirm that the longer-term bullish momentum for oil remains intact. Also, as suggested last week, $80 per barrel was the next key level. At the time of writing, it is trading at $80.60 per barrel. However, before we get too carried away with the bullish narrative, a word of caution following the price action of the last two days.
First, note the candle and volume on Oct. 8. The price spread is narrow, and the volume is high. However, there is one saving grace here, and that’s the fact the open was gapped up sharply by over 50 cents per barrel, which takes effort. Hence, some of the volume associated with this candle can be attributed to this.
Second, note yesterday’s candle. Volume is almost identical to the previous day. And while the price of oil did indeed close higher on the day, it was well below the high of the session, which reached $82.18 per barrel before closing at $80.52 per barrel with a consequent deep wick to the upper body of the candle.
Once again, this signals some short term weakness, with another pause point at this level and likely congestion. But with $82 per barrel and beyond now in sight and with little in the way of either price or volume-based resistance ahead, this should be achieved as price attacks the low volume node in the current area of the VPOC histogram.