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Crude Oil Price Rebound Evolves Into Bull Flag Formation

Crude Oil Price Rebound Evolves Into Bull Flag Formation

David Song, Strategist

Oil Price Talking Points

The price of oil appears to be trading in a narrow range as it bounces along the 50-Day SMA ($87.54), but crude may attempt to retrace the decline from the monthly high ($93.64) as a bull-flag formation appears to be taking shape.

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Technical Forecast for Oil Price: Bullish

The price of oil snaps the recent series of lower highs and lows despite trading to a fresh weekly low ($85.20), and the continuation pattern may unfold over the coming days as crude no longer responds to the negative slope in the moving average.

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Source: Trading View

The bull-flag formation is likely to stay in play as long as the price of oil retains the advance from the monthly low ($80.87), with a break/close above the $90.60 (100% expansion) to $91.60 (100% expansion) region bringing the monthly high ($93.64) back on the radar.

Next area of interest comes in around $93.50 (61.8% retracement) to $95.30 (23.6% expansion), with a move above the 200-Day SMA ($97.34) opening up the $100.20 (38.2% expansion) area.

However, the price of oil may threaten the opening range for October if it struggles to hold above the $84.20 (78.6% expansion) to $84.60 (78.6% expansion) region, with a break below the monthly low ($80.87) bringing the $78.50 (61.8% expansion) to $79.80 (61.8% expansion) area on the radar.

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--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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