Crude Oil Price Resumes Its Advance as Saudi Tankers Attacked
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Crude oil price, news and analysis:
- The price of US crude oil is strengthening again after news that two Saudi oil tankers have been attacked just outside the strategically-important Strait of Hormuz.
- From a technical perspective, the price has now broken to the upside from a triangle pattern on the chart and looks to be heading back towards the $65/barrel mark.
Crude oil technicals positive
The US contract, which from a technical perspective has been trading in a triangle pattern on the charts since Monday last week, has now jumped above the triangle’s resistance line and is drawing closer to the $63.00 high reached on May 6.
If that is breached, there is little further resistance before the $64.77 high touched on April 30.
Crude Oil Price Chart, Hourly Timeframe (April 29 – May 13, 2019)
Chart by IG (You can click on it for a larger image)
Meanwhile, there is plenty of support in the $61.83 to $61.87 area, where the 20-hour, 50-hour and 100-hour moving averages are clustered, as well as at $61.40, where the triangle support line lies.
However, the 14-hour relative strength index is approaching the 70 level, suggesting that the contract is close to being overbought, and there are also warnings of a possible reaction lower from the IG Client Sentiment data.
These retail trader positioning figures show 55.0% of traders are net-long, with the ratio of traders long to short at 1.22 to 1. The number of traders net-long is 9.3% higher than yesterday and 9.8% higher from last week, while the number of traders net-short is 1.2% higher than yesterday and 0.8% lower from last week.
At DailyFX we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US crude prices may fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives a stronger bearish contrarian trading bias.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.