Support at $85 Holds the Key to U.S. Oil’s Bullish Sentiment
U.S. Oil’s Uptrend: Since the start of April, U.S. oil prices have surged by 2.85%, showcasing a strong uptrend on the daily timeframe with moving averages aligned in a bullish configuration. This suggests a continued bullish sentiment as long as prices remain above the previous daily breakout level of $83.50.
Recent Consolidation: The past few days of price consolidation have allowed the Relative Strength Index (RSI) on the daily chart to normalize from previously overbought conditions. This development hints at the potential for further gains in the oil market following the consolidation phase.
Key Levels on the 4-Hour Chart: The uptrend channel is confirmed on the 4-hour chart, with the trendline providing support above $85. This level is crucial for maintaining bullish sentiment, as it aligns with key 4 Hour moving averages and marks this week’s low that successfully provided support. As long as oil prices are maintained above $85, trend structure remains intact, with traders eyeing this level for signs to reignite bullish drives.
Implications of a Drop Below $85: Should oil prices fall beneath $85, it could signal a trend reversal on the 4-hour chart, potentially leading to a short-term correction. The next support zone is identified between $82 and $83.50, correlating with a significant peak on the daily chart from late March.
Short Term Resistance: Immediate resistance is faced at $86.50, which currently constrains upward movements. Breakthrough above this level would confirm renewed bullish momentum, setting the stage for a retest of recent highs around $88, while maintaining the ultimate target of $90 as long as the price stays above $85.
Market Watch for Key Economic Events: The release of the U.S. inflation report, FOMC Minutes, and the EIA’s weekly crude oil inventory data are pivotal events scheduled for Wednesday. These reports are expected to play a crucial role in determining the short-term direction of WTI oil prices.
Geopolitical Tensions in the Middle East: The ongoing conflict in Gaza and surrounding regions continues to pose a significant risk to oil markets. Developments such as ceasefire negotiations between Hamas and Israel are closely monitored, as they could have a substantial impact on global oil supply and market prices.
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