Price took a setback yesterday as bulls found resistance below 97.0, in the form of April’s high which is also confluence with 20th Feb’s swing high. This decline came despite risk appetite maintaining mostly neutral yesterday – S&P 500 +0.19%, DJI -0.03%, DAX -0.13% while FTSE +0.94%. Oil prices, which has been propelled by the strife in Middle East, together with the Oil tank fires in Louisiana US, pulled back significantly reaching a low of 94.6 yesterday. Given the strong manner that price has recovered since touching 90.0 on 1st May, a short term pullback should not be that surprising. Also, the fact that the pullback failed to test 94.0 alludes to the fact that current bullish momentum isn’t truly over yet.
Stochastic readings agree with that assertion, with Stoch lines and Signal lines maintaining their distance apart, suggesting that a bear cycle is not yet in the horizon. The fact that bulls manage to push price back up above 95.0 support (referenced from Jan – Feb consolidation floor) is also a good sign that bulls are not yet done. However, expected 97-98 continue to cast a bearish shadow on price action. Bullish accelerations may only continue should price manage to break the previous 2013 high recorded on Valentine’s day.
Price is also mildly bullish on the short-term chart, with current price level a hair higher than the swing high of last Friday. However, if we look from the perspective of this week only, price is still on a down trend from Monday’s peak. 96.0 appears to be the level bulls will need to beat in order to provide further confidence that current bearish decline is negated and make a retest of 97.0 more plausible. 96.0 is also the current confluence with the rising trendline that price will most likely face should bulls manage to rally from here right now, making a move back above 96.0 harder.
Nonetheless, Stochastic indicator is providing some gleam of bullish hope with both Stoch and Signal lines pointing higher once again, suggesting that the bullish correction move from the recent low of 94.6 is still continuing. But should price fail to break above 96.0 and the trendline confluence, Stoch readings will actually be a confirmation for a continuation of bearish sell-off from 97.0, making 94.6 retest possible, and perhaps even opening up 94.0, and perhaps even towards 93.0 where price may find support in the form of 3rd May consolidation area.
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