Perhaps overshadowed by gold’s recent performance in the commodities space, crude oil prices seem to be floundering as global markets remain uncertain of the future of fossil fuels.
At first glance, the four-hour chart above looks slightly bearish as the price has failed to recover from the September decline. However, rather than a drop in price followed by a period of distribution, there could be signs of a more subtle bounce-back brewing within the technical outlook.
Using a Fib retracement from the $41.46 high to the $36.11 low, both seen in early September, we begin to see an ongoing pattern that hints at sustained oil demand in the short-term. It appears buyers are willing to step-in most notably around the 38.2% and 50% retracement zones and soak up supply. This activity has a bullish feel as the market refuses to let oil prices fall below the areas mentioned.
As we proceed into the latter half of October, and indeed the last quarter of 2020, I suspect we will continue to see prices bounce around within this $36-$41 range. Longer-term, we may see a further uptick in prices with OPEC predicting greater demand from emerging economies, which aren’t as heavily bound to emission restrictions. Therefore, the buying activity discussed around the 50% retracement levels could also be signs of accumulation, while the commodity remains relatively cheap.
Finally, it’s worth noting the weekly pivots visible on the chart for the price has made a habit of gravitating towards these levels during the past few weeks and using them as support.
Note: Click on charts to enlarge.
By Adam Taylor CTEe
Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg
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