By Mohammed Isah of fxtechstrategy.com
Crude oil rallied for a second consecutive week and pushed through the $76.09, $78.01 and the $79.43 levels to close higher at $80.23 on Friday.
for a chart of crude oil.
This comes on the back of the commodity's recovery from its 2010 low at $69.69 and increases the possibility that crude oil will retarget its year-to-date high at $83.93.
A decisive cut through that level would trigger the resumption of the medium-term uptrend toward the Oct. 12 high at $84.79, followed by the .50 Fibonacci retracement ($145.79-$35.53 decline) at $91.18.
Both the weekly and daily studies are bullish and pointing higher, supporting this view.
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Alternatively, corrective pullbacks -- if triggered -- will drive the commodity lower toward $78.01 where a reversal of roles should turn it back up. However, if that level gives in, crude oil should see further downside pressure toward its rising long-term trend-line suport at $76.03 and its Jan. 11 high at $76.09. We look for this zone to provide a platform and turn the commodity higher. This zone preserves the recovery initiated from the $69.69 level.
On the whole, with about 75% reversal of its decline from the $83.93 to $69.69 levels seen, the risk of a retarget of the $83.93 level and beyond is now building up.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.