This is the question on every trader’s mind but let’s look at the facts. We are finally seeing a positive trend in the price of crude oil with a series of higher lows highlighted on the chart below.
After a 50% rally in the price of crude oil between February & March, we subsequently experienced a brief correction. Since April 4th crude has continued to rise in an upward trajectory, having already bounced off the support level at $36.13. Traders will now be looking towards the next resistance point at the $45.55 level to see if the price retraces within the channel or whether we will see a breakout from this range.
Crude oil has an awful habit of becoming range bound for prolonged periods before breaking out aggressively. Another tool that we so often rely on here at the Academy of Financial Trading is the Average True Range (ATR). You can see from the above chart the ATR was virtually at an all-time low prior to the break out occurring around the beginning of January. There was a breakout on the cards and when one has a proven system to help identify where breakouts are probable or likely to occur, it makes the trader’s life that little bit easier.