This commodity is pulling up from its lows lately, but will the downtrend resume soon?
Take a look at these correction levels I’m watching on crude oil.
Check out these lower highs and lower lows connected by a falling channel seen on the 4-hour chart!
Crude oil just bounced off the bottom of this channel and is pulling up to nearby resistance levels. Will sellers hop back in soon?
The mid-channel area of interest is right smack in line with the 38.2% Fibonacci retracement level and might already be enough to keep gains in check.
After all, Stochastic is already reflecting overbought conditions or exhaustion among buyers, which gives the thumbs up for crude oil bears to return.
A higher correction could still reach the 50% Fib at $89.55 per barrel or the 61.8% level closer to the channel resistance. If any of these hold as a ceiling, crude oil could tumble back down to the swing low at $81.26 per barrel or lower.
The 100 SMA is below the 200 SMA to confirm that selling pressure is very much in play. Plus, these moving averages line up with the Fibs to add strength as resistance.
A rebound in risk-taking early this week seems to be propping the commodity price up so far, as traders might be pricing in softer U.S. data. If CPI and retail sales miss expectations, these could convince the Fed to slow down their pace of tightening… and this would be good for fuel and energy commodities!
However, a return in risk-off flows and a larger than expected build in oil stockpiles might be enough to put crude oil back in selloff mode.
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