We reckon this impact is the resultant forces of recent inventory check by EIA , crude for November delivery tested the $50 Wednesday, October 5, 2016, reaching 49.97 as the EIA report showed crude inventory declining.
The crude oil inventories declined 2.976 million barrels which is lower than the expected build of 1.5 million barrels and confirming the larger report’s drawdown (drawdown of 7.6 million barrels) from Tuesday.
The current price jump well above DMAs, while has remained in territory.
But we see stiff resistance at 50 levels where it has rejected at the same juncture in the recent past.
Further spikes seem to be most likely upon break-out above 50 levels.
On a broader perspective, it has been the 3rd consecutive month that the prices have consistently been gaining, amid this journey the current price on this timeframe have jumped above 7EMA and broken 23.6% Fibonacci levels.
The sustenance above 23.6% fibos and 21EMAs could be deemed as the ongoing consolidation phase to transform into reversal pattern.
The current prices have jumped well above 7 & 21DMAs to prolong upswing continuation.
The Leading oscillators signal momentum.
Buying momentum has been intensifying as both and evidencing positive convergence with rising prices above 49 levels.
Finally, the more environment would be established in this energy commodity upon a break out of a crucial resistance at 50 levels.
Hence, it is advisable to stay long in mid-month at dips for targets up to 52.50 levels with a strict stop loss at 46.4667 levels, thereby, the trade is likely to fetch you the handsome risk reward ratio.