WTI Oil Rallies +7.5%, Recording Its Largest One-Week Gain since
Out of the last ten weeks of trading, WTI oil has only printed losses in two of those weeks. Suffice it to say, considering last week’s +7.5% gain, bulls remain firmly on the offensive for now. However, although further upside is supported by the Relative Strength Index exploring higher levels north of the 50.00 centreline on the weekly timeframe (positive momentum), resistance on the weekly chart at $85.20 serves as a potential technical headwind this week (despite a minor close above the level). Consequently, $85.20 will be key to monitor going forward; stripping offers from the aforesaid base reveals $91.71 resistance as a possible upside target on the weekly chart and potentially hands the baton to breakout buyers.
Elsewhere, on the daily timeframe, Friday closed out the week +2.9% higher and recorded a fourth consecutive daily gain. Underpinning the possibility of further strength in this market on this timeframe is the formation of a Golden Cross, which occurred in late August (the 50-day simple moving average crossing above the 200-day simple moving average and is generally observed as a signal that the market could be headed for a longer-term uptrend). On the flip side of this, however, the daily chart’s RSI reveals the possibility of negative divergence (essentially informing traders and investors that upside momentum might be slowing and thus giving rise to a pause or even a reversal). Regarding technical structure to keep an eye on this week, resistance calls for attention nearby at $86.36, sheltered by another neighbouring layer of resistance coming in at $88.80, while support demands consideration at $81.69. Evidently, the combination of weekly resistance at $85.20, daily resistance from $86.36 and daily RSI negative divergence may prove troublesome for bulls this week.
Across the page on the H1 chart, I see price made its way above resistance at $85.17 on Friday, which I have now marked as a potential support base. Although short-term players may interpret this as a breakout higher, given we’re now at fresh YTD highs, the weekly and daily resistances (see above) could hamper upside. Overall, until daily resistance at $86.36 is challenged (and cleared), most breakout buyers are unlikely to be willing to pull the trigger based on the H1 resistance breach on Friday. Therefore, $86.36 will likely be key for some traders this week.
Elsewhere, on the daily timeframe, Friday closed out the week +2.9% higher and recorded a fourth consecutive daily gain. Underpinning the possibility of further strength in this market on this timeframe is the formation of a Golden Cross, which occurred in late August (the 50-day simple moving average crossing above the 200-day simple moving average and is generally observed as a signal that the market could be headed for a longer-term uptrend). On the flip side of this, however, the daily chart’s RSI reveals the possibility of negative divergence (essentially informing traders and investors that upside momentum might be slowing and thus giving rise to a pause or even a reversal). Regarding technical structure to keep an eye on this week, resistance calls for attention nearby at $86.36, sheltered by another neighbouring layer of resistance coming in at $88.80, while support demands consideration at $81.69. Evidently, the combination of weekly resistance at $85.20, daily resistance from $86.36 and daily RSI negative divergence may prove troublesome for bulls this week.
Across the page on the H1 chart, I see price made its way above resistance at $85.17 on Friday, which I have now marked as a potential support base. Although short-term players may interpret this as a breakout higher, given we’re now at fresh YTD highs, the weekly and daily resistances (see above) could hamper upside. Overall, until daily resistance at $86.36 is challenged (and cleared), most breakout buyers are unlikely to be willing to pull the trigger based on the H1 resistance breach on Friday. Therefore, $86.36 will likely be key for some traders this week.