Oil approaches upper boundary of recent trading range

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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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya