Crude Oil Nearing Key Breakout Level
Crude oil futures are nearing resistance in the mid 70s for the 6th time since June. Momentum finally supports a breakout, given sharp movement in other commodities.
The center of Fibonacci resistance from last year’s selloff lies just above the breakout level, with 77, 90 and 100 carving out key zones. The center pivot, at 90, marks the most likely target. Also note that a rally to 100 would fulfill a measured move up swing that equals the January into June rally.
How will 90 to 100 dollar crude oil affect the equity markets? This isn’t early 2008, so there will be more sensitivity to the adverse economic impact, but the inverse dollar-crude oil-gold trade is in full swing, and right now that means higher stock prices.
At some point however, inflation is going to make an unwelcome reappearance and throw cold water on that lockstep relationship.
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