Overview:- From past couple of weeks we have seen roller coaster moves in crude oil where bulls are bears are playing tug of war. Bulls were unable to move above the $58 and bears were unable to take it below $53 level due to which we have witnessed so many choppy sessions in the market. Yesterday itself market marked a 7 week’s fresh high of $58.11 and even sustained above that level with a daily closing, which created hope for bulls. Risk is not shifted yet we will get clear picture if bulls trades and settles above $60 level in near term.
Fundamental analysis:- The production cut signal by OPEC is the main reason to fuel up the crude oil price. In an improved risk environment, coupled with Saudi Arabia’s new energy minister signaling a continued commitment to production curbs, the price of a barrel of oil has shot up. However, amid a dichotomy between demand and supply signals, crude oil markets are set to remain range-bound,
OPEC remains committed to doing the heavy lifting necessary to balance markets, Venezuelan exports are at a sixteen year low and a conflict continues to place a cloud over Libyan production. In contrast, global demand angst continues to be the story with global PMIs continuing to slump and weak demand in Asia ex-China.
Technical Analysis: – hammer candlesticks followed by bullish marabuzo candlesticks have been posted on the daily chart, which is providing us bullish signal on the chart. From technical prospective we can see that a potential rounding bottom pattern has been formed on the daily chart which is providing us bullish signal and $60.80 seems as bare minimum target. The way bulls are reacting it seems like they will approach it like a cake walk.
Presently crude oil is trading above all major and minor EMA lines which is providing us bullish signal. The zero line crossover along with signal line crossover are indicating that bulls are stronger than bears and they may become sky rocket at anytime. The RSI indicator is also arriving above 50 levels which is also providing strength to the bulls and flashing buy signal on the daily chart.
What next:- Odds are in favor of bulls and intraday to weekly bias remains bullish on the crude oil as long as $53 level remains intact. By applying the Fibonacci retracement line we may witness that crude has retraced almost 61% which is known as golden retracement and from here it starts to move north side. The Parabolic SAR is also favoring the bulls and providing us neutral to bullish signal. On contrary a daily closing below $55 level will change the outlook from bullish to bearish.
Trade idea:- Investors and traders are advised to long the crude oil at current level $58 and for the target of $60 and $62 with the tight stop loss of $55. The $60 level is immediate resistance level followed by $62 whereas $55 level is strong key support level followed by $53 level.