Oil continues to trade in a range between $50.38 and $53.31. Overnight the IEA monthly report reiterated global oil demand should be stronger in 2019, citing reasons that lower fuel prices will help the slower economic activity. The supply side issues however will continue to keep oil rallies capped. As more US crude comes out and with global growth concerns remaining high, oil may have trouble breaking out much further.
Since the beginning of the year, the loonie has also followed the move higher with oil prices. Today, the Canadian dollar was also firmer on better than expected inflation data.
Price action on the oil daily chart shows three daily closes above the 50-day SMA. If the bullish move continues, we could see key resistance from $54.50. It is around that area that we could see price form a bearish ABCD pattern. Point is targeted with the 161.8% Fibonacci expansion level. If valid, we could see price pullback towards the $51.50 region. If the pattern is invalidated, we could see further upside target $58.00 level.
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