Introduction
In our earlier analysis, I mentioned key levels in CL crude futures, focusing on a support zone between $66-$71 and a potential breakout above $78.04. There was an expectation of a rally towards higher targets if the price successfully broke above the descending trendline and the 100-week EMA. With escalating geopolitical tensions involving Iran and Israel, bullish momentum was supported by concerns over oil supply disruptions.
Key Updates Based on the Chart (October 9, 2024):
- Bull Target Reached ($78.04):
As predicted in the previous analysis, CL has hit the initial bull target of $78.04. This level aligns with both the 100-week EMA and the descending trendline from early 2023, which were acting as strong resistance areas. - Short-term Pullback:
After touching the target level, the price has pulled back slightly to around $75.30, which is expected after hitting major resistance. The market is showing a natural consolidation before potentially deciding the next move. - Support Zone ($66-$71):
The previously identified support zone around $66-$71 remains intact. As you can see from the chart, this zone has continued to provide a floor for the price action and could once again act as a crucial level if the market faces renewed selling pressure.
- The descending trendline remains a strong resistance and we must keep an eye on it.
- The 100-week EMA at $74.89 is still providing dynamic resistance/support. Currently, the price is trading just below it, and the next few sessions will be critical to see if it holds its bearish resistance.
Trade Opportunities
1. Short-term Bearish Setup (Potential Correction):
Given the pullback after reaching the bull target and the current RSI showing signs of exhaustion, there is potential for a short-term bearish setup.
- Entry: A short position around $75.30-$75.50 with confirmation of rejection near the 100-week EMA.
- Target 1: The first target could be the support at $71.50-$72.
- Target 2: If the price breaks lower, the final target could be in the $68 range, which aligns with the lower part of the support zone.
- Stop Loss: A stop just above $78.50 to manage risk if the bulls regain control.
2. Bullish Rebound from Support (Medium-term Setup):
If the price revisits the support zone around $71-$72, this could present a prime buying opportunity.
- Entry: Long near $71-$72 if the price shows support holding with bullish candlestick patterns.
- Target 1: Immediate resistance at $75.
- Target 2: $78, coinciding with the trendline resistance.
- Stop Loss: Below $66, to protect against further downside.
3. Breakout Trade (Long-term Bullish Setup):
A confirmed breakout above the $78.04 level would signal strong bullish momentum for further upside potential.
- Entry: Long on a break and close above $78.04.
- Target 1: Next target at $85, based on the psychological resistance and previous high.
- Target 2: Full retracement towards $90 if geopolitical tensions intensify.
- Stop Loss: Below $77.50 to avoid a false breakout scenario.
Additional Considerations:
- Geopolitical Risk Premium: Ongoing tensions between Israel and Iran could continue to provide bullish tailwinds to crude oil prices. If the conflict escalates further, supply disruptions could push prices even higher.
- Fundamental News: Keep an eye on OPEC’s production stance and global economic data, which can significantly affect crude oil demand and supply dynamics.
Final Note
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