Crude oil prices on the rise as weekend nears

Technical analysis

Crude oil prices pushed higher over the past 24 hours following steep losses since last week, extending gains during Friday’s Asia-Pacific trading session. WTI also confirmed a breakout above a near-term falling trendline from March 8th, opening the door to reversing the short-term downtrend. Prices seem to have left behind key support, which is a range between 93.51 and 95.22.

Immediate resistance appears to be a combination of the 38.2% Fibonacci retracement level at 107.23 and the 50-period Simple Moving Average (SMA). Clearing these points may further open the door to extending gains, placing the focus on the midpoint, 61.8% and 78.6% levels at 111.46, 115.70 and 121.73 respectively.

To the upside, prices may struggle to clear the 125.93 – 129.42 resistance zone, where the latter is the current 2022 high. Downtrend resumption entails a break under the 93.51 – 95.22 support zone, exposing the late February low at 90.05 before 86.74 comes into focus. Keep a close eye on RSI if prices turn lower and retest the support zone, positive divergence could signal downtrend exhaustion, hinting at a reversal.

WTI 4-hour chart

Oil sentiment analysis - neutral

According to IG Client Sentiment (IGCS), 59% of retail traders are net long WTI crude oil. IGCS tends to behave as a contrarian indicator, meaning that prices may continue falling if downside exposure remains elevated. Still, short bets have increased by 16.13% compared to yesterday while falling 22.91% compared to a week ago. The combination of overall positioning and recent shifts in exposure offer a mixed trading bias.

Follow Daniel Dubrovsky on Twitter @ddubrovskyFX

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