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- Crude oil price breakout eyeing initial resistance targets- constructive above 53.80
- Check out our 4Q Crude Oil projections in our Free DailyFX Trading Forecasts
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Crude Weekly Chart
Technical Outlook: I highlighted this chart in last week’s Technical Perspective and the rally & subsequent close above the 53.94/54.75 resistance zone keeps the focus higher in crude. From here, the risk for near-term exhaustion surmounts on a rally into critical resistance at 59/60- a region defined by the 200-week moving average, the 38.2% retracement of the 2011 decline and the 61.8% extension of the 2016 advance. Weekly support now rests at 53.94 with broader bullish invalidation steady at the 50-handle where the 52-week moving average converges on the lower median-line parallel.
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Crude Daily Chart
A look at the daily chart sees prices trading within the confines of a near-term ascending pitchfork extending off the yearly lows- we’ve been tracking this formation since last month. The 50-line further highlights near-term support at 54.74-55 with the yearly open at 53.80 marking our near-term bullish invalidation level. Initial resistance eyed at the May low-week reversal close at 57.96 backed by 59.12 & the 60-handle- both areas of interest for possible near-term exhaustion / short-entries.
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Crude 240min Chart
Notes: Near-term price action has prices testing median-line support here and if we break lower, look for the pullback to offer favorable long-entries while above 55 targeting subsequent resistance objectives into the upper 50-line. Keep in mind that momentum remains in overbought territory on both the daily & intraday timeframes. Bottom line: the immediate risk is for exhaustion on a drift higher into the upper resistance targets but ultimately a lager pullback would offer more favorable long-entries while with in this formation.
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- A summary of IG Client Sentimentshows traders are net-short Crude- the ratio stands at -1.42 (41.3% of traders are long) – Weak bullishreading
- Retail has remained net-short since Oct 25th; price has moved 9.6% higher since then
- Long positions are 4.0% lower than yesterday but 10.8% higher from last week
- Short positions are 6.9% higher than yesterday but 10.2% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil - US Crude prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week and the combination of current sentiment & recent changes gives us a further mixed Oil - US Crude trading bias.
See how shifts in Crude retail positioning are impacting trend- Click here to learn more about sentiment!
Other Setups in Play
- Weekly Technical Outlook: USD Crosses Eye Make or Break Levels
- USD/JPY Eyes Key 2017 Resistance Hurdle Ahead of NFP Report
- GBP/USD Rebound to Face FOMC, BoE, NFP- Levels to Know
- USD/CAD Eyes Resistance Ahead of FOMC, US & Canada Employment
- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at email@example.com.