Oil ended the week down but the support held

Double Top Pattern Activation in Crude Oil Pointing to $70

Posted Friday, November 18, 2022 by
Skerdian Meta • 2 min read

Crude Oil was showing some bullish momentum at the beginning of this month, as the USD was declining, but it turned lower pretty early too, at the beginning of last week, as other risk assets were still climbing and the USD was still falling.

Buyers failed to push the price above the October high which stood just below $94 and the 100 SMA (green) also turned into resistance in the daily chart, adding further strength to the double top. The price reversed lower but the 50 SMA (yellow) was holding as support for some time, although that moving average was broken yesterday, together with the support zone around $82.20.

WTI Oil Daily Chart – The Double Top Formed Below $94

The neckline at $82.20 broke yesterday

Yesterday was a tough day to get together a clear market narrative, as the USD moved higher with Bullard’s comments helping the case. He wasn’t talking about anything specific but he presented a case where interest rates could go up to 7%.

That helped the USD but China’s covid concerns hurt the sentiment most in financial markets, as comments flip-flopped. Risk assets dived lower and crude Oil was hit by further technical selling as it fell below levels from just below the surprise OPEC cut.

So, crude Oil is struggling through short-term worries around China, covid and global growth but is increasingly optimistic about a peak in FED rates. At the moment China worries have the upper hand and yesterday US WTI crude broke below $82, which is below the neckline.

This triggered the double top pattern activation and now the next target for crude Oil is the big round level at $70, since the distance between the neckline and the top is around $12, so should the distance between the neckline and the bottom target be. We have shifted our bias to short in Oil for the time being.

US WTI Crude Oil Live Chart

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