Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
Bullish Oil Price Behavior to Persist as RSI Sits in Overbought Area

Bullish Oil Price Behavior to Persist as RSI Sits in Overbought Area

What's on this page

Oil Price Talking Points

The price for crude climbs to a fresh monthly-high ($66.60) as the United States ends the temporary exemptions to the Iran sanctions, and the current environment may keep oil prices afloat as the Relative Strength Index (RSI) pushes back into overbought territory.

Image of daily change for major financial markets

Bullish Oil Price Behavior to Persist as RSI Sits in Overbought Area

Image of daily change for crude oil price

U.S. Secretary of State Mike Pompeo warns ‘any nation or entity interacting with Iran should do its diligence and err on the side of caution’ as the six-month waiver comes to an end on May 2, but the stance of the Trump administration may have unintended consequences as the price for oil trades to fresh yearly highs.

In turn, the Organization of the Petroleum Exporting Countries (OPEC) and its allies will have much to discuss at the Joint Ministerial Monitory Committee (JMMC) meeting scheduled for May 19 as the most recent Monthly Oil Market Report (MOMR) highlights ‘slower-than-expected economic activity compared with the expectations of a month earlier.’

Image of OPEC world oil demand forecast

According to OPEC, ‘global oil demand in 2019 is revised downward by 30 tb/d from 1.24 mb/d to around 1.21 mb/d compared with last month’s projection,’ and the report goes onto say that ‘non-OPEC oil supply growth in 2019 was revised downward by 0.06 mb/d to average 2.18 mb/d, mainly due to extended maintenance in Kazakhstan, Brazil and Canada, which was partially offset by upward revisions to the U.S. and Russia.’ It remains to be seen if OPEC and its allies will continue to regulate the energy market as the U.S. and China, the two largest consumer of crude, struggle to reach a trade agreement, and weakening outlook for global demand may push the group to switch gears over the coming months amid the limited threat of non-OPEC production.

With that said,current market conditions are likely to keep oil prices afloat as the recent pullback in crude was short-lived, and fresh developments in the Relative Strength Index (RSI) suggest the bullish momentum will gather pace over the coming days as the oscillator climbs back above 70 and sits in overbought territory.

CL1 Daily Chart

Image of oil daily chart
  • The advance from the 2018-low ($42.36) may gather pace as the price for oil breaks out of a narrow range and initiates a fresh series of higher highs & lows.
  • A close above the $65.90 (78.6% retracement) region raise the risk for a move towards the Fibonacci overlap around $68.80 (23.6% retracement) to $69.20 (50% retracement) as crude continues to retrace the decline from the 2018-high ($76.90).
  • However, will have to keep a close eye on the RSI as it sits in overbought territory, with the oscillator at risk of flashing a textbook sell-signal should the momentum indicator fall below 70.

Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

For more in-depth analysis, check out the 2Q 2019 Forecast for Oil

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other markets the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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