Crude Oil futures have rallied over the past two weeks; reflecting increased economic optimism on the fundamental side, Technically, April’s selloff held Fibonacci retracement support from 48.48 to 46.68. The chart has formed a triangle, and prices are approaching the apex.(There was a triangle last month that led to a selloff; read my post here.) What’s next?
This rally looks like it could extend itself this time. A similar rally last week failed at 51.29 retracement resistance; the subsequent decline had a higher low than the previous swing. Thus far today crude has regained that resistance and is trading over last Friday’s high of 51.75. The upper line of the triangle comes in at 51.70 today; a close over that indicates further rally. The final Fibonacci retracement level at 52.36 is the next upside target and resistance. Clearing that area targets the area of the March/April highs; from $55 to $56. MACD is poised for a bullish crossover, indicating the rally could continue.
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