Oil Prices have fallen since late June. The previous rally was based on anticipation that the Iraq crisis could disturb oil supply, but this has not happened. This week, when WTI Crude price hit 99.00, traders bought it back up. The bullish correction accelerated after the news about a Malaysian passenger airplane shot down in Ukraine, from the skies where there has been recent airstrikes that downed other transport planes. Essentially heightened geopolitical risk globally is keeping oil prices buoyed this week, but I don’t think its enough to give oil prices another bullish leg.
– Looking at the 4H Chart, we see that price has retraced back near 104.
– As you can see, price has held below the 200-period SMA in the 4H chart.
– WTI Crude found a resistance pivot between the 50% retracement and 61.8% retracement of the 107.56-99.02 dip.
– There is a falling trendline that held up.
– The RSI is falling from 70.
These observations point to a market setting up a consolidation range between 99 and 104 for next week. Look for price to gravitate toward the central area of this range around 101.50. If price is around 104.50-105 and teh 4H RSI shows a bearish divergence, watch out for sellers. With price under the trendline form June, oil would be consolidating with bearish bias, or we can say it is in a neutral-bearish mode. This outlook suggests selling on the current rally, with downside risk below the 99.00 low of the week.
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