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Oil bulls pushed the futures above $70, but for how long?
In today’s oil price forecast, I decided to share with you my insights from today’s Oil Trading Alert.
Technical Picture of Crude Oil
Let’s start today’s analysis by quoting the last Oil Trading Alert:
(…) How high can crude oil futures go?
Taking into account today’s earlier breakout above the 38.2% Fibonacci retracement (based on the Nov.22-Dec.2 downward move) and the height of the mentioned consolidation, it seems that we’ll likely see not only a test of the 50% retracement, the Nov.29 peaks and a tiny pro-declining gap ($69.47-$69.50), but also an increase to around $69.85, where the size of the upward move will correspond to the height of the formation.
At this point, it is worth keeping in mind that in this area there is also the upper border of the orange consolidation ($69.87), which serves as an important resistance. Therefore, in my opinion, only a successful breakout above it will be able to open the way to the north and higher prices.
From today’s point of view, we see that the situation developed in line with yesterday’s assumptions and crude oil moved to the north during Tuesday’s session.
Thanks to yesterday’s upward move crude oil futures broke not only above the upper line of the orange consolidation, but also above the 61.8% Fibonacci retracement (based on the entire Nov.22 – Dec.2 downward move) and started another consolidation.
Earlier today, oil bulls hit a fresh local high, but then revered and verified yesterday’s breakout above the mentioned upper line of the orange consolidation, which suggests that we could see an attack on the 78.6% Fibonacci retracement (at around $70.67) or even the 38.2% Fibonacci retracement based on the entire Oct.8 – Nov.18 downward move (marked on the daily chart with red) at around $70.90 in the coming day.
At this point, it is also worth keeping in mind that this resistance reinforces a tiny gap ($70.86-$70.88) from Nov.25 (which is seen more clearly on the 4-hour chart), which suggests that keeping an eye on this area could be crucial for next investment decisions – especially when we factor in the current position of the 4-hour indicators (they climbed to their overbought area, suggesting that the space for gains may be limited and correction in the following day(s) should not surprise – especially if they generate sell signals).
Summing up, crude oil futures moved sharply higher during Tuesday’s session, completing the pro-bullish scenario from yesterday and breaking above the upper border of the orange consolidation, which opened the way to the next resistances. Today’s verification of this breakout increases the probability of another upswing. However, the current position of the 4-hour indicators suggests that the space for gains may be limited, and keeping an eye on the mentioned resistances could be crucial for the next investment decisions. Stay tuned.
Have a profitable day, and see you tomorrow.