Oil prices have seen a sharp two-day fall and then recovered some of their height, ended almost unchanged last week. Four weeks of back-to-back gains with negative divergence keeping us away from the bullish crowd.
We continue to believe that the rally strength is getting thinner and thinner on the daily chart. Lack of new triggers ae taking out the rally strength, we believe. The price fell short of 15 pips to our 1st short-term target at $74.50 vs a high of $74.35.
Underneath weekly technical factors are still on the mixed bias with a concern of how well the oil price handles the 200MA Monthly. As shown on the below chart, twice the price failed at monthly 200MA, and it is worth being cautious as we are approaching 200MA again. On top of the Monthly 200MA resistance, the daily and weekly RSI divergence is also the other bottlenecks to the current rally.
A thick layer of support is located at $71-0.50 and $69.90. Below here, $64.50 exists. A move below $69.90 is required to confirm the short-term bearish signal. On top of these factors further stronger USD likely to apply brakes to the oil rally.
On a bullish scenario as long as $70.50-$71.40 serves as support -it should approach bullish bias aiming at $75.30, $77, and $80 levels. At the time of preparing this article, the price action fails at $74.50 resistance-which could trace a double top pattern if it fails to close above on a daily basis.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
What is your Technical View?
Do you have a different idea? Please leave us a comment and get an answer from our professional analysts