Breaking to the upside through resistance at $100.00, the price of petroleum has continued higher – now trading at $101.94.  This places the resistance level of $102.00 squarely in the sights of bearish crude traders, with the medium term resistance level potentially ending the commodity’s recent run up.  Since the beginning of the month, the futures on oil have climbed by an impressive 6.25%.

Lending to the downside bias is the formation of a rising wedge pattern in the medium term outlook.  Rising wedge patterns are usually associated with weakening momentum in an asset.  The pattern’s sentiment is being supported by a bearish divergence in the MACD signal lines – lower highs in the signal line versus higher highs in the price action.  Technical indicators are additionally showing an oversold signal – with relative strength measurements at 70.

As a result, we anticipate a medium term correction to targets at $97.50-98.00.  But, not before initial support at $101 and $99.85 are tested.

Given the consolidative and volatile nature of the commodity, any binary option trades would do well to be geared toward a weekly expiration.

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