Crude Oil Weekly Chart
Technical Outlook: Last month we highlighted that a multi-month consolidation break was imminent in crude prices with a topside breach favored. Oil broke out into the close of the year with the advance now eyeing near-term confluence resistance at 64.78- this level is defined by the 100% extension of the 2016 advance and converges on the median-line of the ascending pitchfork formation we’ve been tracking for months now.
Crude Oil Daily Chart
The daily chart further highlights this region with near-term embedded ascending channel resistance also converging on the threhshold. Note that daily & weekly momentum remain in overbought territory and we’ll be looking for the break back below 70 to suggest a near-term correction is underway. A topside breach above this mark keeps the long-bias in play with such a scenario targeting the 2010 low at 67.17 backed by the 50% retracement at 70.41.
Crude Oil 240min Chart
Notes: Interim support rests at 63.23 (the measured consolidation target) with a break below the 2015 highs at 62.56 / trendline support needed to shift the medium-term focus lower. Bottom line: The immediate advance is at risk while below 64.78 but the broader focus remains constructive while above 59.12(bullish invalidation). From a trading standpoint we’re on the lookout for a pullback to ultimately offer more favorable long-entries while within the confines of the broader bullish formation.
- A summary of IG Client Sentimentshows traders are net-short Crude Oil- the ratio stands at -1.66 (37.6% of traders are long) – bullishreading
- Retail has remained net-short since Dec 19; price has moved 12.3% higher since then
- Long positions are 0.8% higher than yesterday and 7.0% higher from last week
- Short positions are 0.4% lower than yesterday and 6.9% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil - US Crude prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil - US Crude price trend may soon reverse lower despite the fact traders remain net-short.
Other Setups in Play
- Written by Michael Boutros, Currency Strategist with DailyFX
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