Depending on what you read, the fundamentals seem to be bulish and bearish on Oil in equal quantities lately.
Oil prices have dropped over 50% in the last year with retail investors and informed money alike shorting Brent and Crude futures markets this year. Goldman Sachs have gone as far as to predict that Oil prices could remain depressed for the next 15 years due to a global over supply.
However, in early trading this week, Oil prices have risen against a fundamental backdrop of talk about declining stockpiles, the futures contract rollover on September 16th and a large net reduction in long positions by Hedge Funds according to the Commodity Futures Trading Commission.
Its hard to know which way to trade…
What are the charts saying?
This is a very bearish chart, Brent oil has been dropping over the last year and price has been capped by the trend line in play. What is interesting about this chart is that price broke the yearly lows and plunged to the early $42 before it picked up some buyers and we got some impulsive looking candles bringing price rapidly to $52.
We are now seeing some back and forth corrective price action with price basing off of the $47 level. If we drill down to the 4 hour chart, we can see the corrective price action we have had recently with price firmly capped for now.
If the $47 level can hold, we may get a slow corrective grind to the $58.50 – $59.50 level before suppply really kicks in again. But before Brent can get to this level, there are a couple of potential sticky supply levels to be aware of.
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