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Crude Oil Price Rebound Keeps RSI Out of Oversold Territory

Crude Oil Price Rebound Keeps RSI Out of Oversold Territory

David Song, Strategist

Crude Oil Price Talking Points

The price of oil bounces back from a fresh monthly low ($76.25) as it snaps the series of lower highs and lows carried over from last week, and crude may stage a larger rebound over the coming days as long as the Relative Strength Index (RSI) holds above 30.

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Crude Oil Price Rebound Keeps RSI Out of Oversold Territory

The recent decline in the price of oil appears to have stalled ahead of the January low ($74.27) as it trades within yesterday’s range, with the RSI highlighting a similar dynamic as it moves away from oversold territory.

As a result, the price of oil may stage further attempts to test the 50-Day SMA ($89.90) as the bearish momentum abates, but crude may continue to track the negative slope in the moving average as rising interest rates across advanced economies drags on the outlook for energy consumption.

As a result, the Organization of Petroleum Exporting Countries (OPEC) may continue to shift gears as the group reverts to its prior output schedule, and it remains to be seen if the group will respond to lower oil prices at the next Ministerial Meeting on October 5 amid the weakening outlook for global growth.

Until then, the price of oil may face headwinds as the Organization of Economic Co-operation and Development (OECD) lowers its world growth forecast for 2023, but recent price action raises the scope for near-term rebound in crude as it snaps the series of lower highs and lows carried over from last week.

With that said, lack of momentum to test the January low ($74.27) may keep the price of oil afloat ahead of the next OPEC meeting, and crude may attempt to retrace the decline from the monthly low ($90.39) as the Relative Strength Index (RSI) holds above oversold territory, and

Crude Oil Price Daily Chart

Source: Trading View

  • The price of gold trades to a fresh monthly low ($76.25) after reversing ahead of the 50-Day SMA ($90.32), with crude susceptible to a further decline as the moving average reflects a negative slope.
  • However, the price of oil appears to be reversing ahead of the January low ($74.27) as the Relative Strength Index (RSI) moves away from oversold territory, with crude failing to extend the series of lower highs and lows from last week following the failed attempt to break/close below the $76.50 (50% retracement) to $76.90 (50% retracement) region.
  • A move back above the Fibonacci overlap around $78.50 (61.8% expansion) to $79.80 (61.8% expansion) may push the price of oil back towards the $84.20 (78.6% expansion) to $84.60 (78.6% expansion) region, with the next area of interest coming in around $88.10 (23.6% expansion).

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--- 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.

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