US Crude Oil Indecision

US Crude Oil Indecision
.16 Apr 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing – US Crude Oil Indecision

  • Title: US Crude Oil Indecision
  • Financial instrument: Crude Oil
  • Timeframe: Daily
  • Session: London
  • Trend: Up
  • Trend Confirmation: Exponential Moving Average(EMA), Moving Average Convergence/Divergence(MACD), Relative Strength Index (RSI), Momentum
  • Momentum: Not available
  • Divergence: Not available
  • Support Levels: 84.203, 82.906, 81.155
  • Resistance Levels: 85.954, 87.251, 89.002
  • Trading Strategy: Buy on Breakouts, Buy on Dips

High Impact Economic Events

  • Tuesday, 02:00 am (GMT+0): Industrial Production y/y (CNY)
  • Thursday, 06:00 am (GMT+0): Claimant Count Change (GBP)
  • Tuesday, 12:30 pm (GMT+0): CPI (CAD)
  • Tuesday, 10:45 pm (GMT+0): CPI (NZD)
  • Wednesday, 06:00 am (GMT+0): CPI y/y (GBP)
  • Thursday, 01:30 am (GMT+0): Unemployment Rate (AUD)
  • Friday, 06:00 am (GMT+0): Retail Sales m/m (GBP)

Trend Analysis –US Crude Oil Indecision

US Crude Oil price chart

The price of Crude Oil has exhibited a significant upward move since December 13. After reaching a daily low of 67.708 US Dollars per barrel, the price rebounded to form a technical reversal to the upside, commonly referred to as a non-failure swing. This reversal pattern was followed by a series of higher highs, which paved the way for an upward trajectory. During this period, the bulls were able to pull the price higher to the highest price of 2024, 87.813. Friday’s close completed a Hammer candlestick reversal pattern, rebounding from the session’s low.

This recent price action suggests a bullish sentiment in the market with a possible sideways direction underway. These developments indicate that further upward momentum may be in store for Crude Oil.  

Indicators and Oscillators Analysis 

The Relative Strength Index (RSI) fell below the 70 extreme levels, indicating the possible sideways direction or correction for the commodity. However, traders should exercise caution, as RSI alone may not be a reliable indicator. Additionally, the Bollinger Bands suggest tightening volatility as the Upper and Lower Bands started to converge. At the same time, the Middle Band served as immediate support to the downside correction. The Exponential Moving Average and the Moving Average Convergence/Divergence (MACD) also confirm the upward movement. In particular, prices are trading above the Moving Average line, and MACD is above the zero baseline. Additionally, the Stochastics crossed above the extreme oversold, in the neutral zone. On the other hand, the MACD oscillator indicates a bearish momentum, with the MACD below the Signal line. 

Key Support Levels 

In the current market scenario, the bulls hold the reins of Crude Oil, and the price of the commodity will likely continue to rise. The initial support level is seen at 84.203, and a further decline may lead to a breach of this level. If t this happens, the next support level at 82.906 could come into play. The violation of this level may indicate further potential for a downturn, and the next significant support level is estimated to be 81.155. It is crucial to closely watch these support levels to gauge Crude Oil’s future direction.

S1–>84.203

S2–>82.906

S3–>81.155

Key Resistance Levels 

If the bulls maintain control of the market, a potential correction to the upside may yield gains in the future. However, resistance is likely to arise at various levels. The initial resistance level is estimated to be approximately 85.954; subsequently, resistance is projected to be witnessed at 87.251 and 89.002, respectively. These levels of resistance could pose a challenge to the market’s upward momentum. Nonetheless, with careful consideration of market trends and strict risk management tools, it is possible to navigate these obstacles and mitigate risks.

R1–> 85.954

R2–> 87.251

R3–> 89.002

Trading Strategy for Crude Oil

Based on the technical analysis, traders may consider adding to their positions above the recent high of 87.813, which was marked on April 5. On the other hand, aggressive traders may explore short-term buying opportunities on dips toward the support level and the Middle Band, with tight stop-loss orders to manage risk effectively. The recent dip of 85.998 forming a Hammer at the Middle Band may be a potential entry. Additionally, if the bullish momentum persists and candlesticks continue to close above the Upper Bollinger Band, indicating a continuation of the uptrend, traders may take advantage of the rising prices with long positions.

Conclusion

In conclusion, the technical analysis of Crude Oil suggests a bullish outlook that may continue as upward momentum persists. On the other hand, a possible pause for a sideways market is on the table amid geopolitical tensions. Traders should closely monitor price action around key support and resistance zones and relevant technical indicators to identify potential trading opportunities and manage risk effectively in the current market environment. 

author avatar image
Andreas Thalassinos

Experienced educator with a demonstrated history of working in the financial services industry. Skilled in Technical Analysis, Market Risk, Asset Management, Stock Market, and Trading Systems. Strong professional with a MSTA by Society of Technical Analysts (UK), CFTe and MFTA focused in Master of Financial Technical Analysis from International Federation of Technical Analysts (USA).