Oil has experienced some tough days lately with a downtrend of almost 25% on Brent and WTI, after traders were disappointed with OPEC meeting May 25th. Since last week it starting to recover from its plunge and now it’s situated at a 5 day low. But what can we expect from oil and how can we trade in it?
Since March both WTI and Brent have a bearish trend, on May 25 Oil was priced on channel top which led to a massive plunge when results was to “continue things as they are”. Since then we just saw through our eyes how oil dropped massively.
Most traders including me, were cautious whether oil was going to break channel or not. However we see today that it did respect support line and bounced up. Also we can see that it has had a 4 day bullish trend which can confirm it. But, where is the next resistance line?
On a daily chart we see that RSI, Stochastic and MACD are willing to end “Sell option” and starting to enter to a “Buy Option”. Stochastic is almost showing oversold price and MACD is near to cross signal line. RSI has already entered in oversold and currently in track to a buy signal.
Moving closer to a 4hr chart, we see a 45 degree bullish trend since June 23, price has already passed 50 day MA and on the way to the 100 MA. According to Fibonacci retracement, next target price will be 48.41 followed by 49.60 and 50.78 being the last number our key price in order to respect the resistance channel line.
I recommend to be highly cautious with Oil as a bullish trend is something that fundamental traders do not agree about, and their may be high levels of volatility in this case.
Have a great week and I’ll maintain one or two updates every week on this commodity.