The oil market fundamentals have been mixed with political risks in the Middle East and US-Russia tensions so far. Although these tensions have eased in last few days, but analysts are still sensitive and have eye over them. While Saturday’s strikes were the biggest intervention by Western countries against Syria, oil prices did not rally as speculation that the attacks would lead to prolonged conflict dampened.
Oil prices rose on Wednesday, April 18, 2018, by a reported fall in inventories according to American Petroleum Institute (API). US West Texas Intermediate were up almost 60 cents, equivalent to less than a percent, at $67.13 a barrel.
Up to this reporting moment, oil prices are holding near three-week highs hit on late March. Following is discussed all near to mid-term strengths and weaknesses of its chart from the technical point of view to determine the most probable trend in future.
As it is demonstrated on the weekly chart below, the crude is struggling to break above the %50 Fibonacci retracement drawn from mid-2014 to early-2016 high to low at $66.90. This resistive zone was tested for two times in late January and March this year but failed to break. Although, it is worth noting that the fall each time diminished quickly, meaning that the potential for upside move has strengthened around this level. Furthermore, the weekly bullish engulfing candle stick pattern is also supporting the upside sentiment alongside the price action discussed earlier. If this zone is passed successfully, the next main resistance would be laid at %61.8 Fibonacci level, at $75.97.
On the daily chart, the crude oil bounced upwards after touching %38.2 Fibonacci correction drawn from $61.75 to $67.70 in order to resume the main bullish track which was confirmed by holding above $66.30 level. Simultaneously, a possible morning star reversal candle stick pattern has also been recognized which needs to be confirmed in following trading sessions.
From another perspective, the dynamic support, moving averages also support higher prices scenario where the EMA 5 keeps supporting the suggested bullish wave. It should also be mentioned that the initial situation for the continuation of the bullish scenario is the stability above previously mentioned level of $66.30.
To conclude from long term and short-term indicators mentioned above, we believe that the recent upward move is not completed yet and there is still more room for the crude to rise. The next station we suggest to watch closely is $70.33 as it is %100 expansion level prior to previously mentioned $75.97.