In today’s oil price forecast, I decided to share with you my insights from today’s Oil Trading Alert. Have a nice read!
Will this support withstand the selling pressure?
Technical Picture of Crude Oil
Let’s start today’s analysis by quoting the last Oil Trading Alert:
(…What can we expect next?
Although the buy signals generated by the 4-hour CCI remain in the cards (the Stochastic Oscillator is very close to generate a buy signal), supporting the bulls and higher prices, the combination of all the above-mentioned resistances doesn’t look encouraging – especially when we factor in the second orange gap that started Thursday (it is still open at the moment of writing these words) and the solid resistance zone seen from the daily perspective.
Therefore, even if the bulls manage to push the price higher in the following hours, in my opinion, as long as the mentioned gaps remain open the way to the north is not wide open and opening long positions at these levels can be a risky decision. (…)
Looking at the above charts, we see that although crude oil futures moved a bit higher after the U.S. market open, the proximity to the upper border of the blue declining channel in combination with the next resistances (about which you could read in recent alerts) lured the bears to the trading floor.
As a result, the price quite quickly reversed and declined sharply not only erasing the earlier upward move but also creating a bearish engulfing candlestick formation on the 4-hour chart (which reinforced the resistance zone).
This negative development translated into another lower open and one more red pro-declining gap ($69.22-$69.91) appeared on the chart. The show of the bulls’ weakness was noticed by the bears who attacked once again and pushed the price slightly below the major support – the previously broken upper border of the black triangle.
As you can see on the charts, this key support line (in combination with the 61.8% Fibonacci retracement marked on the 4-hour chart) encouraged the buyers to fight once again, but despite their efforts the red gap that started Friday remains open (at the moment of writing these words).
At the same time the 4-hour indicators slipped to their overbought areas, which suggests that the space for declines may be limited. However, in my opinion, as long as the mentioned gap is open and there are no buy signals, another attempt to move lower can’t be ruled out.
How low could the futures go?
If the bulls fail to close today’s session above the upper border of the nearest red gap, we could see a not only a re-test of the upper border of the black triangle (marked on the daily chart), but also a test of the lower line of the blue declining channel (currently at around $68.20) or even the 78.6% Fibonacci retracement in the coming day(s).
Therefore, in my opinion, the result of the battle fought here will likely decide where the furthers head next in the coming week. In other words, I think that waiting at the sidelines for clearer clues about the next move seems the best investment decision at the moment.
Summing up, although crude oil futures invalidated the earlier tiny breakdown under the upper line of the black triangle, the red gap that started Friday continues to keep gains in check. Therefore, in my opinion, waiting at the sidelines for more reliable clues about the next bigger move seems justified from the risk/reward point of view.
Have a profitable day, a wonderful weekend and see you on Monday.
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Anna Radomska