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Crude Oil Rally Runs into Resistance - Can Bulls Continue to Push?

Crude Oil Rally Runs into Resistance - Can Bulls Continue to Push?

James Stanley,
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Crude Oil Price Talking Points:

  • The April-May sell-off on crude oil has finally found some element of resistance inside of the 60-handle, which coincides with a trend-line projection as taken from the April and May swing highs.
  • This two-week bounce has seen price action retrace more than 50% of that prior bearish move; are oil markets on the cusp of a bigger-picture bullish theme? An OPEC meeting on July 1-2 can assist on the driver side of the matter, one way or the other.

Crude Oil Price Tests Resistance at 60 Handle

Oil prices have continued the rally after cauterizing fresh five month-lows earlier this month, breaking above a near term level of resistance earlier this week. While oil prices were flying high as the risk trade was in full bloom through April, a strong turn developed that pushed oil prices lower throughout the month of May and into June. Support finally showed up in the first week of the month, and after almost two full weeks of consolidation, buyers were able to take-control of the matter, helped along the way by last week’s FOMC rate decision that served to push the bid in a number of risk markets.

Crude Oil Price Chart – Daily

crude oil price chart daily

Chart prepared by James Stanley

The big question at this point is whether the bullish trend is back again or whether this is a mere pullback in the sell-off that started two months ago; and given context there could be a valid case to make on either side of the matter.

On the bearish side of oil, this current zone of resistance that’s helping to hold the highs contains a few areas of note. The 60 psychological level is just above yesterday’s high, but there’s also a Fibonacci level in there at 59.64, as this is the 50% marker of the October-December sell-off from last year. Combined with the bearish trend-line projection, this could be an area of interest for short-side swings, looking for a pullback to run back down to the 57.26-57.85 area that has previously functioned as both support and resistance. Beyond that, short-side targets could be attractive around another area of prior support, taken from around the 55 level.

Crude Oil Price Chart – 8 Hour

crude oil price chart eight hour

Chart prepared by James Stanley

On the other side of oil prices and given the strength with which the past two weeks have shown, and traders could hone-in on that recent trend in the efforts of plotting topside continuation. Given the confluence shown at current resistance, this could make for an explainable reason as to why the topside trend has taken a pause. This can also open the door for higher-low support potential for those looking at bullish themes in oil; with that same zone looked at above as short-side target potential being used, instead, as higher-low support potential. This takes place around the 57.50 psychological level, aided in part with a Fibonacci level at 57.26 and a prior swing-high at 57.85 to create a zone of interest. Also in that area is now the 23.6% retracement of that two-week bullish move. Reasonably, that move could back a bit more while still keeping bullish prospects alive, and the area around 56.34-56.73, spanning from the 38.2% of that recent move to this week’s swing low could be a secondary area of support potential.

Crude Oil Prices – 4 Hour

crude oil price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

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--- Written by James Stanley, Strategist for

Contact and follow James on Twitter: @JStanleyFX

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