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 8, 2024
Did the fresh local peak change anything in the short-term picture of the commodity?
Technical Picture of Crude Oil
Looking at the daily chart, we see that although crude oil futures hit a fresh local peak during yesterday’s session, the overall situation in the short term hasn’t changed much as the red resistance zone (marked with the red ellipse with 1) continues to keep gains in check.
From today’s point of view, we see that yesterday’s bulls’ weakness translated into Friday’s lower open, which created a pro-declining red gap ($72.36-$72.17) that triggered further deterioration during Asian and early European trading hours.
Additionally, the Stochastic Oscillator generated a sell signal, giving the sellers another reason to act, which suggests that another attempt to move lower and a re-test of Monday’s supportive gap could be just around the corner.
How has the recent price action affected the 4-hour chart?
From this perspective, we see that yesterday’s rebound took crude oil futures not only to a fresh local peak but also above the previously broken lower border of the green rising channel, invalidating the earlier breakdown for the second time in a row.
As you see, this price action resulted in a big white candle, which became the basis for consolidation (marked with orange).
Therefore, in my opinion, another bigger move will be more likely and reliable only if we see a successful breakdown under the lower line of the formation or a breakdown above the upper border of the consolidation.
What could be the bearish scenario?
If the sellers manage to close the day under $70.87, we could see not only a re-test of the above-mentioned Monday’s supportive gap, but also a decline to around $69, where the size of the downward move would correspond to the height of the consolidation and where the 61.8% Fibonacci retracement (based on the entire recent rebound) is.
What could be the bullish scenario?
However, if the lower border of the formation withstands the selling pressure, we could see a reversal and another attack on the red resistance zone (marked on the daily chart) in the following day(s).
Connecting the dots, it’s worth carefully observing the behavior of the market participants around the mentioned support/resistance borders as it could give valuable clues about the direction of the next upswing/downswing.
Summing up, crude oil futures failed to break above the first red resistance zone once again, which translated into a red pro-bearish gap that triggered further deterioration before the U.S. market open. Thanks to this price action, the futures came back under the lower border of the very short-term green rising channel, which, together with the sell signals generated by the 4-hour indicators, caused a decline to the lower border of the orange consolidation (marked on the 4-hour chart). In my opinion, the outcome of the battle fought here will indicate the next very short-term move. Therefore, keeping an eye on both borders of the very short-term consolidation could be the key to further profitable trades.
Have a profitable day and a wonderful weekend, and see you on Monday.
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Anna Radomska