U.S crude oil prices have climbed to a major area of interest!
Will the 115.00 zone keep the bulls away?
Here’s what I’m seeing on the 4-hour chart today:
WTI Crude Oil: 4-hour
In case you were too busy looking at Bitcoin wrestling with the $30K handle, you’ll know that other “risk” assets like equities and crude oil have been bullish for most of the week.
Better-than-expected earnings results from U.S. retailers, the Fed’s confidence in its 50-basis-point rate hikes, China’s commitment to boosting the economy, and the equities markets’ oversold conditions helped drum up risk appetite in the global markets.
U.S. crude oil bulls have more going for them. The U.S. Energy Information Administration (EIA), for example, recently reported a bigger-than-expected drawdown in supplies.
China reopening its major cities and the U.S. approaching its summer (read: driving) months also pointed to higher demand. Lastly, EU members haven’t given up pushing to ban Russian oil.
With both supply and demand pushing prices higher, WTI crude oil has found enough buyers to bump it up back to the 115.00 area.
Will the bears hold the psychological area for another day?
Stochastic is on the bears’ side with an overbought signal. Meanwhile, candlesticks on the 4-hour chart also point to potential exhaustion.
But don’t short the commodity just yet!
Note that WTI has been making higher lows and higher highs since late April while the 100 SMA is holding as support.
If it looks like WTI’s fundamentals would lead to a breakout above the 115.00 resistance, then you should be ready to target higher areas of interests.
You can also wait for a break-and-retest setup if you’re not sure about a breakout, but know that WTI may not look back if it does break higher.
IF it looks like 115.00 would hold as resistance after all, then you can probably short the commodity all the way to the 110.00 previous inflection point.
Whichever bias you end up trading, make sure to practice your best risk management moves so you don’t get blindsided by volatile price action!
What do you think? Will we see an upside breakout this week?
