It looks like crude oil could soon spike.
May crude oil futures pressed to new swing highs and above the .618 major retracement level at $95.55 yesterday, reaching a high of $96.45. After a strong close last Friday, and a trade though the 50 percent retracement at $94.45 on Monday, we have seen a massive short-covering this week. All rallies begin with a short cover, and this one has helped crude find a path of least resistance higher ahead of the three-day weekend.
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Last night, global fears and poor performing equities overseas helped push the dollar higher, and a stronger dollar, as you know, will put pressure on commodities priced in dollars. This should present a good buying opportunity, keeping crude in check early, and allowing traders to step in at the major technical support now at $95.55. The next support below here will be $94.45, and we expect longs to defend this level; only a close below here will signal a failure. The next upside target is just shy of $98, which was the high made on February 20. If the S&P makes new all-time highs, we could see $100 crude in the cards.