Another day, another gap and next bulls’ targets.
In today’s crude oil price forecast, I decided to share with you my insights from Friday’s Oil Trading Alert. Have a nice read!
Technical Picture of Crude Oil
In yesterday’s Oil Trading Alert, you could read the following:
(…) another green supportive gap appeared on the chart: $70.10-$70.94), which suggests that further improvement may be just around the corner – especially when we factor in the current position of the indicators (as a reminder, the CCI turned north, while the buy signal generated by the Stochastic Oscillator continues to support the bulls).
So, what can we expect next?
In my opinion, at least a re-test of the strength of the above-mentioned first resistance zone (marked with the red ellipse with 1). Nevertheless, just like yesterday, I believe that the way to the north will open only if we see a successful breakout above this area.
What could happen in this case?
(…) We’ll likely see (at least) a test of the next resistance zone (created by the red gap [$73.53-$74.03] from Sept.3rd, the 50% Fibonacci retracement [based on the entire Jul.-Sept. downward move], the 61.8% Fibonacci retracement [based on the mid-Aug.-early-Sept. downward move] and the upper border of the pink declining trend channel) marked with the red ellipse with 2 on the chart.
Looking at the daily chart, we see that the situation developed in line with the pro-bullish scenarios and crude oil futures climbed to the above-mentioned next resistance zone (marked with the red ellipse with 2 on the chart) during yesterday’s session.
Thanks to this move a big white candle appeared on the chart, which successfully broke above the resistance area that stopped the buyers in the previous month. This show of the bulls’ strength translated into another higher open and the third in a row green gap ($73.71-$73.94) was formed, which triggered further improvement in the following hours.
As a result, oil bulls pushed the price above the mentioned second resistance zone, which means that the outcome of today’s session will indicate the direction of the next move.
What do I mean by that?
If the bulls manage to hold gained levels and the futures finish today’s session above the second resistance zone, the way to (at least) the next resistance area (created by the 61.8% Fibonacci retracement [based on the entire Jul.-Sept. downward move], the 78.6% Fibonacci retracement [based on the mid-Aug.-early-Sept. downward move]) will be open (marked with the red ellipse with 3 on the chart).
However, if the bears show their claws at current levels and crude oil futures close the day below the mentioned second resistance zone, we could see a correction of the recent increases and a verification of yesterday’s breakout above the Sept. 24 peak in the coming days.
Summing up, crude oil opened Friday with another green supportive gap that triggered further improvement in the following hours and the test of the second red resistance zone, which suggests that the result of the battle played here will decide the direction of movement for the next sessions. Therefore, keeping an eye on the current resistances and today’s closing price could be the key to further profitable trades and indicate the direction of the next (at least) very short-term move.
If you’d like to receive similar - more extensive analysis on black gold (the full version of my analysis includes trading details and my premium subscribers are updated regarding the trading details on a daily basis), I encourage you to subscribe to Oil Trading Alerts.
And if you’re not yet on our free mailing list, I strongly encourage you to join it - you’ll stay up to date with our free analyses that will still put you ahead of 99% of investors that don’t have access to this information. Join our free oil newsletter today.
Anna Radomska