Oil corrected lower then stuck in a sideways move. Will bears lead the price action or will bulls come back?
Oil Price Technical Analysis
· Oil Price Corrected lower
· Negative outlook while below $39.60 for Brent and $36.32 for WTI
Crude Oil Price Edged Lower
In late August, an upward trend led Brent oil to a six-month high at $46.51 than retreated after as bulls seemed to cut back. Last week, the price retreated further and closed in the red with a 6.2% loss, while the US oil closed with a 3.7% loss.
This week, the Relative strength index (RSI) has risen from 30 to 44 highlighting that bears were losing momentum.
Brent Oil Daily Price Chart (July 3- September 16, 2020)
Last week, the Brent oil failed on multiple occasions to move to the lower trading zone, reflecting the bear’s hesitation to press even lower. As a result, the price traded in a sideways move and pointed higher eyeing a test of the high end of the current $39.60 - $42.50 trading zone.
A daily close above the high end of the zone at $42.50 may send the price towards the weekly resistance at $45.15 (July 2016 low).
On the flip side, a failure in closing above the high end of the zone could reverse the price’s direction to re-test the low end of the zone at $39.60. A further close below that level could send the price even lower towards the monthly support at $37.00 (a psychological level).
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Last week, the US crude oil rebounded from the low end of the current $36.32 - $42.23. Consequently, the price pointed higher hinting to test the high end of the zone.
A daily close above the high end of the zone at $42.23 may encourage bulls to extend the rally towards the monthly resistance level at $45.38 (August 2017 Low).
On the other hand, a failure in closing above the high end could reverse the price direction towards the low end of the zone at $36.32. A further close below that level could mean more bearishness towards $34.27.
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