And when we add a dash of stock market rotation – bam!
Energy-related assets are making contact!
But while rates continue to rise and energy names are ripping, crude oil has not been able to break out…
Check out the daily chart of crude oil futures sliding back within its prior range:
Notice the multiple contact points along the 83.25 level. That’s our line in the sand.
Market participants have proven the importance of this level as sellers defend this critical shelf of former highs. But the more times price tests a level, the higher the likelihood it will break.
I want to buy strength on the next breakout above 83.25. If demand absorbs the overwhelming supply at that key level, I’m long with a target at the November 2022 high of approximately 93.
That’s $10 of upside. Not bad…
Meanwhile, I’m monitoring black gold for further weakness toward 74. Continued selling pressure in crude does not bode well for energy.
As oil contends with this crucial supply zone, we must maintain vigilance, tracking potential failed breakouts and near-term reversal patterns in energy stocks.
But I won’t let crude’s failed breakout deter me from riding the next wave higher in energy.
I remain cautiously bullish.
COT Heatmap
We're updating our COT Heatmap and will be bringing you a new and improved data set in the coming weeks.
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