Sellers Dominated Crude Oil Ready For Retracement
In the early Asian sessions, our fresh forex trading signal on WTI crude oil closed at our target prices, giving us early morning profits. There were two major reasons behind this call:
First, the downtrend in the crude oil was fundamentally supported. In my previous update, May 3rd Daily Highlights, I discussed the inventory releases. Yesterday, the Energy Information Administration (EIA) released inventory figures showing a draw of 0.93 million barrels. The draw was less than the expected 2.2 million.
As we know, a drop in inventories represents less demand for the crude oil over the previous week. As a consequence, investors started selling the crude oil because of increased supply.
Forex Trading Signal
At the 2nd trading signal, I recommend opening a buying position above $47.30 with a stop loss below $46.95 and a take profit of $47.62.
Crude Oil – 4 Hour Chart
Technical Outlook – Intraday
The second reason was that on the 4-hour chart, there is a bearish triangle pattern which is extending a strong support at $47.30. In addition, the same $47 – $47.30 is a major support area which gives investors a buying signal. The leading indicator is holding in the oversold area. This demonstrates that buyers are looming around the area. Crude oil is very likely to retrace to $47.70 and $48 before showing the further bearish trend.
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