Crude oil prices rise amid softening of USD, bulls eye trendline resistance

oil price forecast

• Oil prices rise, extension of their recovery started from last week
• Technical signs are not very bullish yet, but the situation may improve
• The trendline resistance will cross the $91.00 area in the coming days

most Read: Crude oil prices dodge the strength of US dollar after US CPI surprise. Will WTI rally?

Oil prices rose on Wednesday amid a softening US dollar in currency markets, extending their recovery that began after bouncing off a longer-term trendline support and a key Fibonacci retracement level located at the $82.00 area last week. At one point in the trading session, WTI crude was up nearly 3.4% to $90.2, its best level since Sept. 6, but then trimmed some of those gains to trade slightly above $89.00 a barrel. Of.

From a price action perspective, the bulls still have some reason to be concerned. Firstly, oil is making lower highs and lower levels since June, which is a negative sign for the commodity. At the same time, we have seen the formation of a death cross on the daily chart, a pattern that is generally viewed by technical analysts as bearish.

To be sure that the downsides that have occurred over the past few months are over, we need more positive technical signals to develop. One of these, and perhaps an important one, may come from a high high Which kicks off the August peak, but we’re still far from that point: one day at a time for now.

oil major technical level

In any case, oil price is approaching a key resistance near the handle of $91.00 following the recent advance, a ceiling created by a three-month downward trend in the game. If we see a clear move above this hurdle in the coming days, breakout traders The upside could be a jump back, consolidating momentum and launching an attack on the 200-day simple moving average. On further strength, the focus shifts to the August swing high at $97.66, the line in the sand that could determine the near-term trend.

On the other hand, if sellers, speculating on a weak economic outlook and heightened uncertainty, re-emerge to trigger a bearish reversal, initial support sits at $85.50. If this floor is breached on the weekly close, the next one to watch is near the $82.00 area, as mentioned above. If the bulls fail to defend this area, the sentiment could soon turn worse, paving the way for a pullback towards the $78.00 area.

WTI Crude Oil Technical Chart

WTI oil chart created using TradingView

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— Written by Diego Coleman, Market Strategist at DailyFX