Introduction
CL Futures saw a huge rally of 5% yesterday as the EIA showed a larger than expected drawdown in stock piles. This has given bulls new hope that CL can break above $80 and possible head toward $100 in the future.
Recent News
Geopolitical Tensions: Escalating geopolitical tensions in the Middle East raised concerns about potential disruptions in oil supply. Any threat to major oil-producing regions can lead to fears of reduced supply, driving prices higher.
Inventory Reports: The latest inventory report from the U.S. Energy Information Administration (EIA) showed a larger-than-expected drawdown in crude oil stockpiles.
Economic Data: Positive economic data from major economies, including strong GDP growth and increased industrial activity, suggested robust demand for crude oil.
OPEC+ Production Cuts: Continued adherence to production cuts by OPEC and its allies (OPEC+) has kept supply tight. Recent statements from key OPEC+ members indicated their commitment to maintaining these cuts, which supports higher prices.
Technical Analysis
Bullish Trade Setup
Support Zone (68.00 – 72.00 USD):
- Entry: Consider entering a long position if the price revisits the support zone and shows signs of a reversal, such as a bullish candlestick pattern or an uptick in volume.
- Stop-Loss: Place a stop-loss just below the support zone, around 67.50 USD, to protect against a false breakout.
- Target: Aim for a target around the 80.00 USD level.
Moving Averages Crossover:
- Entry: Monitor for a potential crossover of the 50-day moving average (blue) above the 200-day moving average (red). This golden cross can be a strong bullish signal but please note, THIS IS A VERY LONG TERM POSITION.
Bearish Trade Setup
Resistance at 80.00 USD:
- Entry: Consider entering a short position if the price approaches the 80.00 USD level and shows signs of a reversal, such as bearish candlestick patterns or a decline in volume.
- Stop-Loss: Place a stop-loss just above the resistance level, around 81.50 USD, to safeguard against a breakout.
- Target: Aim for a target back towards the support zone at 72.00 USD.
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