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Crude Oil Price Building a Familiar Trading Pattern

Crude Oil Price Building a Familiar Trading Pattern

2019-10-09 10:12:00
Nick Cawley, Analyst
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  • US crude oil rebound taking place.
  • Moving average resistance ahead of trendline.

Q4 2019 Oil Forecasts and Top Trading Opportunities

How to Trade Oil: Crude Oil Trading Strategies and Tips

Crude Oil Bouncing off Short-Term Support Zone

A familiar pattern is emerging on the daily US crude oil chart. The recent heavy sell-off in crude was arrested as it neared a supportive zone between $50.50/bbl. and $50.70/bbl. and has turned higher. The daily chart shows this is the third time this zone has acted as a springboard for higher prices after a supportive upward trend was broken. The 20-day moving average is breaking below the 50-day ma, as it did in the previous two moves, while the CCI indicator flashed an oversold signal near the three recent lows.

To confirm the recent bullish move, US crude oil will need to break back above the old support/new resistance trendline around $57/bbl. while taking out the 200-day moving average at $57.90/bbl. would confirm the move higher. Above here, old horizontal resistance at $60.98/bbl. becomes the next bullish target. The $50/bbl. level has been supportive since mid-January this year and is also seen as a big figure line in the sand for oil producers. A break and close here would see the chart turn bearish.

Crude Oil Price Daily Chart (January – October 9, 2019)

Crude Oil Price Building a Familiar Trading Pattern

WTI vs Brent: Top 5 Differences Between WTI and Brent Crude Oil

The IG Client Sentiment Indicator shows retail traders are 85.0% net-long US crude oil, a bearish contrarian bias, but recent shifts in daily and weekly positioning give us a mixed outlook.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on Crude Oil – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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