Oil outlook: Strong weekly gain boosts reversal signals

Slobodan Drvenica Windsor Brokers

WTI Oil

WTI oil has registered the second weekly gain (the contract was up 3.3% this week), lifted by growing optimism over easing trade tensions between the USA and the European Union and signals of possible deal, new US sanctions on Iran and initial positive signals in US - China trade relations.

Reversal signal is developing on daily and weekly charts, as bounce from new 4-year low ($55.12) has so far retraced over 50% of $72.27/$55.12 bear-leg, while Doji morning star pattern has formed on weekly chart.

However, recovery may face increased headwinds as technical studies on daily chart are predominantly negative and still fully bearish on weekly, suggesting that much stronger work at the upside is still required to improve the picture (sustained break above cracked Fibo 50%, reinforced by daily Kijun-sen at $63.63, seen as minimum requirement).

Also, fundamental factors that support current recovery would be countered by the latest downgrade of oil prices and demand growth by OPEC, Energy Information Administration, in light that existing economic crisis could be deepened if negotiations fail, and trade war escalates.

Res: 64.16; 65.22; 65.72; 66.08.
Sup: 63.32; 62.65; 61.67; 60.00.

Interested in Oil technicals? Check out the key levels

1. R3 66.86
2. R2 65.5
3. R1 64.6
PP 63.25
1. S1 62.35
2. S2 60.99
3. S3 60.09

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD climbs to daily highs on US CPI

EUR/USD now accelerates it rebound and flirts with the 1.1880 zone on Friday, or daily highs, all in response to renewed selling pressure on the US Dollar. In the meantime, US inflation figures showed the headline CPI rose less than expected in January, removing some tailwinds from the Greenback’s momentum.

GBP/USD clings to gains above 1.3600

GBP/USD reverses three consecutive daily pullbacks on Friday, hovering around the low-1.3600s on the back of the vacillating performance of the Greenback in the wake of the release of US CPI prints in January. Earlier in the day, the BoE’s Pill suggested that UK inflation could settle around 2.5%, above the bank’s goal.

Gold: Upside remains capped by $5,000

Gold is reclaiming part of the ground lost on Wednesday’s marked retracement, as bargain-hunters seem to have stepped in. The precious metal’s upside, however, appears limited amid the slightly better tone in the US Dollar after US inflation data saw the CPI rise less than estimated at the beginning of the year.