Crude oil was unable to break through the $98.22 resistance on Wednesday. It reached a high of $98.11 before retreating on what was actually a supportive inventory report.
(Read More: US Oil Output Hike: What It Means for Gulf Producers)
The failure to break out and test $100 brings this market under the influence of the outside trade. Crude traders today must gauge the U.S. dollar Index and the weaker euro to learn the topside in crude will be limited. Additionally, if the equities retreat (look for an S&P 500 trade below 1,508) crude will likely fall as well.
(Read More: Brent Slips Below $118; Euro Zone Woes Weigh)
If crude is as strong as it appears, then it will probably avoid a retest of $95, because it is likely that a retest of $95 and our support levels will not hold for a third time in one week. Current price action has just violated the first support level — look for a test of the next support level at $96.63 for a possible buying opportunity ahead of jobless claims. This market can remain bullish all the way down to 200-day moving average at $92.12.
The next major level of support is at $93.50, so look for that to come into play on a retest to $95. Buy the first test against yesterday's low with a tight stop. But if we drift higher, sell against the $98.22 level.