In today’s oil price forecast, I decided to share with you my insights from today’s Oil Trading Alert. Have a nice read!
November 6, 2024
Bulls’ meeting with the first important resistance zone and its implications.
Technical Picture of Crude Oil
Let’s start today’s analysis by quoting yesterday’s Oil Trading Alert:
(…) The CCI and the Stochastic Oscillator moved to their overbought areas, suggesting that the space for increases may be limited and another correction of the upward move could be just around the corner. However as long as there are no sell signals the bulls have green light for fight for higher prices.
Looking at the charts, we see that although crude oil futures closed yesterday’s session slightly above the upper border of the orange bearish gap from Oct.28, the first very important red resistance zone (marked with the red ellipse with 1 and created by the mentioned upper border of the orange bearish gap from Oct.28, the Oct. 24 peak of $72.34 and the 50% Fibonacci retracement based on the entire Oct. downward move) was strong enough to stop the bulls and trigger a pullback before the end of the day.
Thanks to this price action, oil bears invalidated the earlier tiny breakout above the 50% Fibonacci retracement, which, together with the sell signals generated by the 4-hour indicators, translated into a sharp downward move during Asian trading hours.
As you see today’s move took the price under the lower line of the blue consolidation (marked on the 4-hour chart), which gave the sellers an additional reason to act. As a result, crude oil futures slipped below the lower border of the very short-term green rising trend channel and tested the strength of the green gap from Monday ($69.49-$70.29).
What’s next?
Although the above-mentioned gap (which now serves as the nearest support) triggered a rebound in the following hours, the sell signals generated by the 4-hour indicators continued to support the sellers, and another attempt to move lower.
Therefore, in my opinion, as long as there is no invalidation of the breakdown under the lower line of the mentioned green channel, another downswing and (at least) a re-test of the nearest supportive gap is likely.
Before we summarize today’s alert, please keep in mind that if the bulls do not manage to invalidate the mentioned breakout (and let their opponents close the gap), we could see a decline even to around $68.63, where the size of the downward move would correspond to the height of the channel.
Summing up, crude oil futures failed to break above the first red resistance zone, which translated into a reversal, an invalidation of the earlier tiny breakout above the 50% Fibonacci retracement, the breakdown under the lower line of the blue consolidation (marked on the 4-hour chart) and the breakdown below the lower border of the very short-term green rising channel, which together with the sell signals generated by the 4-hour indicators suggests that another attempt to move lower is likely (especially if the bulls do not invalidate today’s breakdown under the green rising channel).
Have a profitable day, and see you tomorrow.
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Anna Radomska