Oil: technically the asset is ready for correction

Fundamental factors continue to push the prices for the asset up, but it's getting harder to grow the asset with each new frontier. As we see, taking each new peak is accompanied by a rather long period of consolidation. That is, growth is no longer an explosive nature and buyers need to spend a lot of preparation before taking the next line of sellers’ defense. And this is a clear sign that the strength of the bulls is running out. In addition, the last serious correction for oil was already quite a long time ago - in February. Thus, oil is clearly ready for a serious correction movement.

If you look at the technical indicators, then there are enough confirming signals in favor of this. For example, the divergences in the indications of the RSI (8) oscillator and the dynamics of the oil price on the daily chart: the indicator values have recently decreased, and the price values have increased. Divergences, as a rule, evidence that the current price movement has somewhat divorced from reality. The strong overbought (above 75 even on the daily chart) of the oscillator itself speaks in favor of the fact that oil prices have climbed too high.

If you decompose the current upward movement with the Fibonacci correction zones, you can estimate the potential correction size. As can be seen (the end of the red zone), the decline should last at least to $ 62. Thus, sales above $ 72 will earn about $ 10 on each sold barrel of oil. This is a very good result, although it is worthwhile to put the stops on the deal relatively small, as it should not be forgotten that this trade is essentially countertrend and it is not worthwhile to stay under water for a long time - it's easier to re-open the position near the next consolidation zone on the top.