Crude oil keeps advancing – is this a new uptrend or still a correction?
The crude oil futures contract continued its uptrend on Monday, reaching the highest since late February, extending gains above the $68 level. The market reacted to the stock market's rebound and weaker U.S. dollar. Last Wednesday’s FOMC meeting had little impact on the markets, but oil rebounded from its local low and continued higher.
Today, oil prices are up another 0.7%, testing potential resistance at $69-70.
Oil Price Broke Its Downward Trend Line
Quoting last Wednesday’s analysis, “The daily chart of crude oil futures is still showing a clear downtrend that began with the January 15 local high of $79.39. However, the decline appears to be pausing near last September lows, which could be a positive sign for oil bulls.”
Yesterday, oil continued higher, breaking above its recent consolidation. The market is now within a short-term uptrend; however, it is still below the $70 level and some of its previous lows, which means that currently, it looks like an upward correction.
Weekly Chart: Rebounding from Support
Crude oil rebounded from its medium-term support of around $65. It is retracing this year’s declines. However, consolidation still continues for now.
Conclusion
Crude oil is extending its advance today as investors sentiment improves on stock market's rebound, weaker U.S. dollar, and easing tariff fears.
Is this a good time to open a short position? I don't think so - the market is approaching strong medium-term support levels and could move sideways or rebound.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil is still creeping higher, nearing the key $70 level.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist