Crude oil extends gains after rallying on Monday – is this a new uptrend?
Crude oil futures gained 3.06% on Monday, breaking above the key psychological level of $70 amid heightened geopolitical tensions. Today, oil slightly extends its advance, gaining another 0.1% as traders continue to assess the implications of tariffs, scheduled to be announced tomorrow.
The market faces several events this week that will likely dictate short-term price action:
- Crude oil inventories will be release tomorrow.
- President Trump's tariff announcement is expected tomorrow.
- OPEC+ meetings are scheduled for Thursday.
Oil Price Breaks Above Key Resistance
Quoting last Wednesday’s analysis, “The daily chart of crude oil futures is still showing a clear downtrend that began with the January 15 local high of $79.39. However, the decline appears to be pausing near last September lows, which could be a positive sign for oil bulls.”
The market is now within a short-term uptrend, reversing the previous bearish momentum. The breakout above $70 represents a technical development that could mean more buying pressure is likely. However, potential resistance is around $73, marked by the previous local highs.
Weekly Chart: Potential Reversal Pattern
On the weekly chart, we can see that crude oil has rebounded from its medium-term support around $65. This bounce could mark the beginning of a larger reversal pattern. It still trades below the almost two-year-long downward trend line though.
Conclusion
Crude oil has broken above the important $70 level, driven by Trump's tariff plans. Is this a new uptrend or still just an upward correction of the downtrend? The market will be waiting for key developments this week, but the bulls appear to have momentum, and crude oil could test its next resistance around $73.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil has broken above the key $70 resistance level, confirming uptrend in the short term.
- Investors are awaiting Trump's tariff announcement and OPEC meetings later this week; tariff threats create potential supply concerns.
- n my opinion, the short-term outlook is neutral, and no speculative positions are justified from the risk/reward point of view.
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Paul Rejczak,
Stock Trading Strategist