Yesterday was a significant breakthrough for WTI Crude, adding to the long list of bullish achievements that was accomplished since breaking back above 89.0 significant resistance.
Bulls have managed to clear 90.0 interim resistance, breached into the 92-94 consolidation area, rebuffed a retest on 92.0, and now threatening to breakout of 94.0 and move towards 95.0. Despite all these achievements, Stoch readings continue to point higher with a fair distance between Stoch and Signal line – a sign that bullish momentum is still going strong. There is also a slight distance between now and the previous peak back in early April, suggesting that price may just be able to nudge towards 95.0 within current bull cycle, though higher objectives beyond 95.0 may be in doubt without any sort of bearish response first.
Hourly Chart agrees with the daily chart longer term bullishness. Price has been steadily moving up in step-liked fashion, which is generally more sustainable that a quick sudden jump that generally faces risks of sharp pullbacks of equal magnitude. It is once again interesting to see an interim trough forming right now when price hasn’t move significantly away since Asian open. This is similar to what we’ve seen yesterday, where interim troughs have been formed under similar circumstances before the rally commences. Price had the benefit of using the rising trendline as launchpad though, something that current price action lack. However should price remains at current levels for the next 10-12 hours, we would be able to see a like-for-like replicate of yesterday’s scenario, where price can potentially bounce off the rising trendline to aim for 95.0 this time round.
Crude Oil currently is enjoying the “risk-on” sentiment that is surrounding US stocks currently. Despite weaker US economic numbers, both stocks and energy commodities have been trading higher. There is the risk that current “feel good” factor could be due to speculators front running tomorrow’s FOMC meeting, expecting a more dovish Fed to come out with guns blazing given the weaker US figures. If Fed turned out to be more hawkish than expected, price can be expected to pullback significantly. But should price manage to continue to hold its own above 92.0, this may suggest that the rally may be more sustainable, with the recent increase in demand not a mere volatility spike, but a proper longer term shift (however unlikely that may sound). If Fed does come up to be more dovish, traders may still need to watch out for potential “buy the rumor, sell the news” behavior.
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