DominikStone

The market continues to consolidate the key breakout above 69.55

TVC:USOIL   CFDs on WTI Crude Oil
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The market continues to consolidate the key breakout above 69.55 whilst the psychological 70 adds to the continued positive outlook. The support of a five week uptrend now comes in today at 69.50 to bolster this breakout support, whilst the rising 21 day moving average is also has supported recent corrections and comes in today around 69.40. Recent neutral daily candles with a mild bull bias reflect the consolidation and with momentum indicators retaining their positive configuration this reflects an outlook of buying into weakness for another impending upside break. This week’s low at 70.25 adds to support and with the strength of the momentum continues to drive an expectation that the next move is still likely to be higher despite two failed attempts to move above 71.90. Subsequent resistance is minor from a 2014 range 73.25/77.85.
Comment: Consolidations remain a chance to buy on WTI. Although the market could not close above the initial resistance at 71.90 last week there is still a strong configuration across the momentum indicators that suggests WTI will continue to be bought into weakness. The trend higher of the past six weeks supports at 70.20 which is now a confluence of support with last week’s higher low (at 70.25). The last two candles show the bulls have been a touch stunted but there is nothing to suggest the run higher is going to end any time soon. Friday’s low at 71.00 is now the initial support to watch and helps to bolster the price above the 70.25 reaction low and the breakout at 69.55. Above 72.30 has the bulls looking at next overhead supply area 73.25/77.85.
Comment: The bulls continue to push on in the drift higher into multi-year highs, with intraday weakness still an opportunity to buy. Yesterday’s move hit $72.85 before slipping back into the close, but as yet there is little to suggest that this move will be seen as anything more than another chance to buy. Momentum indicators remain bullishly configured and intraday weakness is consistently being bought into. The RSI is in the mid-60s still and anything holding above 60 will continue to be positive momentum for a continued trend higher. The current six week uptrend is supportive at $70.30 whilst there is price support in the band $71.00/$71.90 initially. The hourly chart shows a slight caveat with the hourly RSI dropping back below. This suggests the bulls may have to respond today. A decisive move below $71.00 would begin to ask a few more questions.
Comment: With oil under pressure anyway during yesterday’s session, a significant surprise build in the weekly crude inventories adds into a more corrective near term move just forming. In the past week the market has been drifting quietly higher in a small uptrend but a second negative candle now increases the near term pressure on oil. The next key test today will be not only whether a third consecutive negative candle is seen (not happened since early April) but also whether the market retreats further to test the support of the six week uptrend (comes in today at $70.85). For now the momentum indicators remain positively configured with the uptrend of the past three and a half months on the RSI still intact,. There is a clutch of support starting at $70.25 with the psychological $70 level and the old key breakout at $69.55.
Comment: The sharp decline over the past couple of weeks continues to drag the market lower, however is now breaking decisive medium to longer term bullish arguments. The latest bear candle yesterday’s not only confirmed the breaching of the 9 month uptrend, however also took the market below the rising 89 day moving average (which has acted as an excellent basis of support in recent months) for the first time since September. Momentum indicators are also continuing to sharply deteriorate. The next basis of support comes in at 61.80 and is the next test to the downside. The bear move has also now left behind a band of resistance 65.80/66.65 which is now a band of overhead supply and sell zone. This is reflected on the hourly chart which now shows a pivot at 66.00 and intraday rallies being sold into.
Comment: The market managed to hold a positive session into the close and with continued gains today, an eight session downtrend has been broken. There is much to do before this can be considered a sustainable turnaround, but the posting of a second consecutive positive candle would certainly help today. Holding back above the 89 day moving average (today at 65.43) would also help. However momentum indicators are correctively configured. There is now an increasingly important band of resistance with the old pivot around 66.65 which will be key to this recovery, as rallies have been seen as a chance to sell. Key resistance is at 68.65 and another lower high below here would be a continuation of the selling pressure. Support is at yesterday’s low at 64.22.
Comment: After briefly threatening a recovery, oil resumed its decline yesterday as the market closed lower once again. The surprise inventory build in the EIA oil stocks of crude, distillates and gasoline certainly has not helped what looks to be a continued corrective outlook on WTI. Additionally, the resistance band $65.80/$66.65 also came in to provide a barrier for yesterday’s session before the market fell back. Momentum indicators remain in negative configuration. The initial support around 64.25 held yesterday but risk remains to the downside and a breach would open the key April higher low at 61.80.
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