Oil Price Forecast: Break Above June High Knocks Out Bearish RSI Trend
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Oil Price Talking Points
The price of oil may stay afloat going into the end of July as it clears the June high ($41.63), while the Relative Strength Index (RSI) appears to be breaking out of a bearish trend.
Technical Forecast for Crude Oil: Neutral
The price of oil appears to be on track to test the March high ($48.66) after taking out the June high ($41.63), with crude on the cusp of trading above the 200-Day SMA ($43.11) for the first time since January.
Looking ahead, the 50-Day SMA ($27.88) looks poised to converge with the 200-Day SMA ($43.11) amid the narrowing gap between the moving averages, with the 50-Day SMA still tracking the positive slope from June. However, a crossover in the 50-Day and 200-Day moving averages may lack the characteristics of a ‘golden cross’ formation amid the difference in slope.
Nevertheless, the price of oil may continue to trade to fresh monthly highs going into the end of July as the RSI clears the downward trend from June, but it remains to be seen if the indicator will continue to diverge with price as the advance in crude fails to push the oscillator above 70 and into overbought territory.
Oil Price Daily Chart
Source: Trading View
Crude may continue to retrace the decline from earlier this year as it fills the price gap from March on a close basis, with the break above the June high ($41.63) pushing the price of oil towards the 200-Day SMA ($43.11).
Need a break/close above the $42.90 (78.6% retracement) to $43.40 (23.6% expansion) region to open up the Fibonacci overlap around $44.60 (61.8% expansion) to $45.10 (61.8% expansion), with the March high next on the radar.
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.