Oil is another commodity that has been struggling to break away from a congestion phase. It is building a strong level of resistance in the $40.50 per barrel, a level clearly defined with the red dashed line of the accumulation and distribution indicator. As can be seen from the thickness of the line, this has been developing into a strong region and one which has been tested repeatedly over the last few weeks and once again on Friday, with this morning’s price action hovering below. But note the volume on Friday, which was supportive of a move higher. The key now for oil in the longer term is a move through this region, as ahead we have a low volume node on the volume point of control histogram and as such an area that presents little in the way of resistance from a volume perspective.
In summary, if oil can reach $41.50 per barrel or beyond, at this point the bullish trend should be established once more and, as confirmed by the trend monitor indicator, with the current resistance area then becoming support.