Crude oil has been on a tear lately, taking it to the top of its range visible on the daily time frame.
Will it retreat from here? Or can it extend its gains past this resistance zone?
Here are the levels I’m watching.
WTI Crude Oil (USOIL): Daily
Is crude oil in for a bounce or a break?
The commodity price is hanging out at the very top of its range around the $81.15 per barrel level, still deciding where to go next.
Technical indicators are hinting that the ceiling might hold, possibly sending oil back down to the nearby support levels.
Stochastic is already indicating overbought conditions or exhaustion among buyers, so heading lower could confirm that bearish vibes are returning.
The 100 SMA is below the 200 SMA to suggest that the path of least resistance is to the downside, although the commodity has already climbed above both indicators. This means that the moving averages might hold as dynamic support levels if a selloff happens.
I’m also seeing an area of interest around the $75 per barrel resistance-turned-support zone, which might keep potential losses in check.
Just make sure you keep an eye out for a bullish range breakout that might spur a rally that’s the same height as the rectangle pattern!
After all, expectations of more stimulus from China could be enough to ramp up demand for fuel and energy commodities. In addition, reports indicating that supply is tightening are also keeping crude oil prices supported.
