WTI Oil: Retracement May Provide Potential Long Opportunity
- WTI Finally Back Above the Psychological $90.00/bbl Level.
- Morningstar Candlestick Pattern on the Weekly Hints at Further Upside.
- OPEC+ Will Not Hesitate to Keep Prices Supported, $100/bbl Remains in Play.
WTI Fundamental Outlook
WTI Oil rallied 17% last week on the back of OPEC+ announcing production cuts to begin in November. Saudi Arabia’s energy minister stated last week that he’s never known uncertainty like this while reiterating the need for market stability. OPEC+ have made their position clear with the recent cuts in production that they are willing to do what is necessary to keep prices stable and closer to the $100 a barrel mark. Given the announcement by OPEC+, the US are weighing the potential of dipping into their strategic petroleum reserves once more. Should the US follow through and demand concerns linger we could be in for a pullback in price before a potential rally higher toward the $100 a barrel mark. This would tie in perfectly with the technical narrative developing at the moment.
From a technical perspective, WTI on the weekly chart has printed a Morningstar candlestick pattern while closing above the key $90.00 psychological level. The weekly candle closed with barely any upside wick, a further indication of the upside momentum in play. The weekly candle has tapped into 50-SMA providing resistance which has capped gains to start the week. Given the size as well as the speed of the move there is every chance of a pullback at this stage. The better question being how deep a pullback should we expect?
On a daily chart, WTI has broken and closed above the 20 and 50-SMA as we now trade between the $90.00 and $95.00 psychological levels. The RSI on the daily meanwhile remains in overbought territory which adds further credence to the possibility of a pullback in price.
We have a host of support areas which may come into play should price continue pushing down. The closest being the key psychological $90.00 level where price previously double-topped before declining sharply. A deeper pullback in price could lead to a retest of the 20 and 50-SMA which lines up with the 2013 and August 2022 lows around $85.00-$87.00 area. The host of confluences at play in this area only adds to the probability for bulls to step in once more with new highs around the$95.00-$100.00 area a possibility.
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Written by: Zain Vawda, Market Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.