Double bottom pattern
April crude oil futures for WTI (West Texas Intermediate) broke out of the double bottom pattern. Prices closed at $51.53 per barrel on March 4, 2015—just above the key resistance of $51 per barrel. The consensus of future supply decline and the improving demand outlook supported the rise in the crude oil prices. As a result, prices closed above the 50-day moving average.
Support and resistance
The current momentum could push crude oil to the next resistance of $54 per barrel. Prices hit this mark multiple times in February 2015. In contrast, the important support for WTI crude oil is at $48 per barrel. Crude oil prices hit this mark multiple times in January and February 2015.
According to the crude oil price chart, the double bottom breakout could push WTI prices to a target of $53–$54 per barrel levels. Bullish factors—like the consensus of supply shortage and improving demand—will support the crude oil prices. However, the RSI (relative strength index) is in overbought territory. Prices usually fall from these overbought territory levels. Sentiments of bullish inventory data could also have a negative impact on the oil prices.
The increase in oil prices affects margins for oil ETFs—like the VelocityShares 3X Long Crude ETN (UWTI) and the ProShares Trust II (SCO). It also affects oil producers—like Whiting Petroleum (WLL), Hess Corporation (HES), and Continental Resources (CLR).
For the latest updates, visit Market Realist’s Crude Oil ETFs page.