Crude Oil Weekly Technical Outlook: Bullish
- Crude oil costs closed at September 2014 excessive and new 2022 peak
- The commodity seems to be setting itself as much as go on the offensive
- This is as retail merchants maintain promoting, warning of additional positive factors subsequent
WTI crude oil costs soared about 5.9 p.c this previous week, bringing the commodity to shut out at a brand new 2022 peak, in addition to the best shut since September 2014. Oil has rallied nearly 50 p.c since discovering a backside in December, extending the broader uptrend since 2020. Is the commodity setting itself as much as resume positive factors within the week forward?
Oil finds itself sitting on the ceiling of a rising trendline from March 2021, holding as key resistance – see every day chart under. As such, indicators of weak spot within the week forward may trace on the subsequent leg decrease of what has been a gradual uptrend. A bullish Golden Cross between the 20- and 50-day Simple Moving averages stay in play, providing a bullish bias.
These strains might come into play as key assist ought to costs flip decrease. Still, taking out rising resistance might open the door to extending positive factors. Above sits the 123.6% Fibonacci extension at 97.20 earlier than the 138.2% degree comes into place at 101.30. In the occasion of a flip decrease, it could be useful to look at the 4-hour chart for a greater image of key assist ranges.
WTI Daily Chart
Chart Created Using TradingView
In the 4-hour setting, WTI has left behind a impartial Doji candlestick sample. While this will not essentially trace at a reversal, draw back affirmation within the following periods might improve the chance of a broader flip decrease. This is as unfavorable RSI divergence exhibits that upside momentum is fading.
In such an occasion, a near-term rising trendline from December might come into play as key assist. Under the trendline sits the February 3rd low at 86.74. Taking out the latter might open the door to revisiting the 81.37 – 82.77 assist zone earlier than the 200-period SMA comes into focus.
WTI 4-Hour Chart
Chart Created Using TradingView
Crude Oil Sentiment Outlook – Bullish
The IG Client Sentiment gauge (IGCS) exhibits that about 27% of retail merchants are net-long crude oil. IGCS can at instances perform as a contrarian indicator. Since most merchants are biased to the draw back, this hints costs might maintain rising. This is as draw back publicity elevated by 15.78% and 35.84% in comparison with yesterday and final week respectively. With that in thoughts, the mixture of general and up to date shifts in positioning are providing a bullish contrarian buying and selling bias.
*IG Client Sentiment Charts and Positioning Data Used from February 4th Report
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the feedback part under or @ddubrovskyFX on Twitter
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