The higher lows and higher highs continue to print on the daily and four-hour chart, and the support base rises from $70 to $70.50-$71. All these factors are suggesting the bullish trend likely to hold for some more time. But the rally strength is getting thinner and thinner on the daily chart. Lack of new triggers ae taking out the rally strength, we believe.
Lately, the UK government has extended the lockdown for four weeks. As a result, sentiment has turned to neutral instead of supportive behavior. We believe the economic impact of delaying the lockdown for four weeks will be limited. Besides, easing restrictions in Europe is supporting the sentiment. Hence a balanced demand approach is keeping the oil price float.
Technically, the latest A-B-C uptrend pattern suggests we are heading towards $74.50, the monthly 200MA, and $80 levels. Without new triggers, how well the oil price handles the 200MA is our key concern. As shown on the below chart, twice the price failed at monthly 200MA, and it is worth being cautious as we are approaching 200MA again. On top of the Monthly 200MA resistance, the daily and weekly RSI divergence is also the other bottlenecks to the current rally.
A thick layer of support is located at $71-0.50 and $69.90. Below here, $64.50 exists. A move below $69.90 is required to confirm the short-term bearish signal.
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