Lack of Momentum to Foster Consolidation

0
88

Technical forecast for oil: Mixed

  • A period of consolidation appears ahead for crude oil prices.
  • Descending Triangle pattern can be reversed soon.
Petroleum Forecast

Petroleum Forecast

Recommended by Daniel Moss

Get Your Free Oil Forecast

Crude oil prices have declined in recent days, following an explosion above the psychologically impressive $ 60 per barrel level. Although the long-term technical outlook points to further gains, prices may consolidate in a relatively tight period soon.

Crude Oil Weekly Diagram – Break from Low Points from 2008 to Further Back

Technical forecast for oil: Lack of Impulse to Consolidate Consolidation

Diagram prepared by Daniel Moss, created with Tradingview

The longer-term outlook for oil remains biased, as prices remain constructively above all six moving averages and the decline extends from the 2008 high.

However, with a bearish crossover occurring on the MACD indicator, and the RSI testing its upward trend since the March nadir, a prolonged period of consolidation could be imminent.

That said, if support at 58.90 continues to consolidate, a retest of the annual high (67.94) is likely to take place in the coming weeks.

On the other hand, if sellers successfully breach support, a recovery to the sentiment-defining 144-EMA (51.92) may begin.

Daily Crude Oil Diagram – Firming in a Descending Triangle

Technical forecast on oil: Lack of Impulse to Consolidate Consolidation

Diagram prepared by Daniel Moss, created with Tradingview

Zooming the daily chart also suggests that prices may consolidate soon, with the formation of a Descending Triangle possibly forming.

However, bullish moving average stacking, along with the RSI and MACD tracking firmly above their respective neutral midpoints, suggests that the path of least resistance is higher.

Finally, a daily end above 63.80 is needed to validate a bullish potential and focus on the annual high (67.94). A bargain that would signal the resumption of the main uptrend trend and sculpt a path for buyers to challenge psychological resistance at 70.00.

However, if resistance to the Descending Triangle strengthens, prices may continue to slow to support at 57.30 – 57.90.

Technical forecast on oil: Lack of Impulse to Consolidate Consolidation

La IG Customer Feeling Reportshows 62.74% of net-length traders with the proportion of long-to-short traders from 1.68 to 1. The number of net-long traders is 5.44% lower than yesterday and 7.43% higher than the last week, while the number of traders net- short is 10.59% higher than yesterday and 29.45% lower than last week.

We usually oppose a view of crowd sentiment, and the fact that traders are short-lived suggests that oil – U.S. crude prices may continue to fall.

Positioning is shorter than yesterday but shorter than last week. The combination of current sentiment and recent changes gives us further mixed trade prejudice Oil – US.

– Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

Petroleum Forecast

Petroleum Forecast

Recommended by Daniel Moss

Get Your Free Oil Forecast



Source

LEAVE A REPLY

Please enter your comment!
Please enter your name here