Amidst what is likely now a long-term uptrend--based on the strong bounce off a major support area at the start of the year (indicating a major low is in place)--the December crude oil contract (CL) is currently presenting another buy signal.
The buy signal is based on a false breakout below in the $44 region. This support was formed by two swing lows in September, just above the August low of $41.58.
Just above $44, down to $41.58 was a potential buy region, based on these support levels and the longer-term uptrend likely in play. Between November 4 and 14 the price progressed below $44, but a series of long-tailed candles indicated buyers were stepping in aggressively to snatch up prices below $44. November 15 is seeing a strong surge back to the upside, moving well above prior $44 support area. False breakouts are typically accompanied by a sharp move in the opposite direction.
Figure 1. December Crude Oil, Daily Chart
The upside price target is $51, just below the October high of $52.22. Ultimately, if the uptrend continues, the price is expected to move above the June high of $53.62...although that may not occur until the New Year.
There are a couple things to consider before taking a long position though. While there is a trade setup, 20-year seasonality shows November and December aren't typically good months for crude. Oil often declines at the end of the year, and then rises through the start of the year.
In the shorter-term, the weekly EIA Petroleum Status Report, released each Wednesday at 10:30 AM ET, has been having a big impact on intraday price fluctuations.