Oil Pushed Higher Breaking $51.50 Resistance for a Reversal or Retracement. Despite having strong Bearish trend, the price countered impulsively. Let’s check Oil Technical Analysis for more levels and insights.
February 6, 2020 | AtoZMarkets.com – Oil is currently residing above $51.50 resistance area with strong intraday Bullish momentum in place. Yesterday, after the Oil managed to bounce back again above $50 area, Bulls were quite consistent and stable with the gains. As a result, Oil managed to break above the most important resistance of $51.50 recently.
OPEC’s plan on reducing Oil production seem to work as the Oil price began it’s climb higher. As the Oil market rebounds from the slide, currently investors are optimistic as OPEC’s plan may work out further in the coming days. Oil price declined more than 20% since it rejected off the $65.50 area earlier. As the current Bullish intervention manages to push higher, further upward pressure may occur in the near future.
On the other hand, U.S. crude inventory expanded by 3.36 million barrels last week. Saudi Arabia and Russia remaining split over the global demand crisis may come to a conclusion as the Oil prices started to rise currently.
Oil Pushing Higher may result in Retracement
Oil is currently pushing higher residing above $51.50 and at the edge of $52. The price has broken above the strong resistance level with impulsive pressure which is more likely to attract more Bulls along the way.
image: Oil 4 Hour chart
According to 4 Hour chart, the price recently formed Bullish Divergence along the way lower which came into effect recently. The price did manage to bounce back higher and break above $51.50 resistance area with strong bullish move. The resistance area between $50.50 and $51.50 was a strong barrier to break for the Bulls and currently it is broken.
Oil Breaking Resistances does not mean Reversal
As the price broke above the horizontal resistances, it also broke above the dynamic levels. The dynamic levels like 20 EMA, Tenkan and Kijun lines are residing below the current price line. It is heading higher towards the Kumo Cloud resistance from where the Bears may takeover and push the price lower again.
The Chikou Span (Green Line) is residing at the price line resistance which indicates certain downward pressure is in the making. As the price remains below $53.00 area with a daily close, the Bearish bias for Oil may remain intact. As a result, the price consolidate and correct back and forth around $50 to $53 range.
To conclude, Currently Oil may push higher towards $53 area having certain confluence along the way. But it may continue the Bearish run until it remains below $53 with a daily close. Current Bullish momentum can be considered as Retracement only, not Reversal.