Crude Oil sits above $82 a barrel. Is it time for a pullback or do we head to the highs of $87 again?

It is fair to say that Crude Oil has been correlating well with the U.S. Stock markets this year and if we are to see a surge to 2010 highs then one would feel that stocks would also move to 2010 highs.

For the now though the over extended price action seems to favour some kind of a pull back. What size of a pullback can we expect? $80 should be the first target and only once a move of this nature unfolds can we evaluate if a deeper correction can be produced.

Take a look at the following chart which has been produced by Richard from tradingmarketsignals.com

Amazingly, clearly and concisely you can see how one of the TMS indicators below the price action is mapped out with red circles which has produced 200+ point pullbacks. The green circle shows that the market produced a clear signal for upside to follow.

So far the strength of Crude has the price pitched above $82. Does this mean that we move straight up? Ofcourse we can but probabilities at this stage would warrant a move south of around 200+ points which could unfold with pure ease.

Since hitting lows of $72 in early July we have moved up $10 in four weeks. You can see how neatly this has been depicted above by the blue channel that shows the price has hit the top of this channel in Tuesdays session along with the one of the TMS indicators below which corroborates with the notion of over extended price action that would normally have a tendency to create a pullback.

With the action of the first few trading days of August you can rest assured that Crude Oil is not the only over extended market.

The Sterling versus the Dollar is also showing extreme over extended action.

To obtain analysis of this kind with TMS system signals that produce REAL market moves, it would probably be wise to look at the link for membership below in which you can join the TMS private member community at $225 for 12 months.

At TMS we have just opened our live trading room where the signals are not just for the position style suitors but also for the intraday and short term traders! In the last few months we were issuing short term and intraday signals and with the success we have demonstrated it was apparent that TMS needed a live trading room!

This is a chance to come on board and obtain our TMS system signals for Dow Jones, GBP.USD, EUR.USD, FTSE100 & Crude Oil:

Membership offer ends after the U.S. market closes on the 4th August 2010: http://tradingmarketsignals.com/#/tms-annual-membership-offer/4542738012