Crude Oil Outlook: Big Gap & Resistance Levels in View
Crude Oil Highlights:
- WTI crude oil rallying hard, but has obstacles in the way
- Saudi gap and 2017/18 lows are in near confluence
WTI Crude oil rallying hard, but has obstacles in the way
WTI crude oil has been pretty much on a one-way path since bottoming in late April, but the path could get bumpier soon as confluent resistance stands in the way of the advance over the 40-mark. Oil is currently trading inside the March 9 Saudi gap that shook financial markets when they were already reeling from the coronavirus.
The gap is a rather significant hole that leaves a little more room to go before it is filled up to 41.51. Not too far beyond that point is the June 2017 and December 2018 lows that are in almost exact alignment at 42.27/42.67, respectively. It appears likely there will be some kind of fight that develops around the 41.51/42.67 zone. It could come as quick as this week, but perhaps it takes a little longer if oil slows its roll until reaching for resistance.
From a tactical standpoint, fresh longs don’t appear to hold good risk/reward while shorts are still risky with oil trending higher and no significant resistance yet at hand. That could soon change, where existing longs are at risk of a decline developing, while shorts gain the upper hand off of resistance.
Crude Oil (Aug Contract) Daily Chart (confluent resistance ahead)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.