Signs of Exhaustion After Strong Rally in Crude Oil

Crude Oil has been retreating since last Tuesday and it giving some bearish signals after moving above $90/barrel


In July, crude Oil began to rise from around $67 per barrel, establishing a very strong positive trend. Dips are still being purchased, and smaller moving averages have been acting as support, confirming that buying pressure is high. By the middle of August, crude Oil had taken a further dive, but it found support and turned around right at the 50 SMA (yellow) on the daily chart.

The 20 SMA (gray) has also been supportive of WTI Oil, pushing the price higher, eventually reaching above $92 on Tuesday last week, as Saudi Arabia and other OPEC+ members have taken steps to reduce output. But the price retreated as the FED delivered a hawkish hold in last Wednesday’s meeting and WTI crude fell to $88.40s.

The price formed adoji candlestick down there which is a bullish reversing signal and on Friday Oil started turning bullish again. But at the end of the day, the price retreated back down and closed near the 20 daily SMA. Today sellers are coming back and are heading the price toward this moving average and the daily candlestick looks bearish already, so it looks like we are seeing another deeper retreat.

So, crude Oil prices have begun the week on the wrong foot, as the market digests Russia’s temporary restriction on diesel and gasoline exports into an already tight market, which has been tempered by the FED’s hawkish message last week that interest rates would remain higher for longer. We have been long on Oil during this time and will follow the price action to see when this retreat might come to an end.

US WTI Crude Oil Live Chart

WTI
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Related Articles

Comments

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

HFM

Doo Prime

XM

Best Forex Brokers