West Texas Intermediate crude oil futures and a related exchange traded funds are breaking out of a slump and are picking up momentum.
The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, are both above their 100-day simple day moving averages. [ETF Investors Have Large Footprint in Oil Futures Market]
Additionally, the oil market broke above a neckline resistance after pushing through a double bottom, and oil prices are now trading back at December levels.
“When you look at the chart of crude oil on the heels of Wednesday’s explosive move, you can see that it’s not too late to buy,” Rich Ross, head of technical analysis at Evercore ISI, said on CNBC. “I think crude is going to $65” a barrel.
Ross argues that the oil market may experience further strength over the short-term after the oil charts formed a double bottom pattern, which provide oil with a strong base of support and sets the stage for more upside.
“Importantly, Wednesday, you see a breakout from the neckline of the [double bottom]pattern which comes in right around $54 a barrel,” Ross said in the article. “What’s great about the breakout [Wednesday] is that the rally not only took out the neckline, but it crossed above its 100-day moving average for the first time since last summer.”
WTI crude oil futures were hovering around $56.8 per barrel Thursday while Brent oil futures were trading around $63.9 per barrel.