- Oil.WTI has broken above a falling trendline
- A move above 47.50 would further support the case for a rally
- 67% of XTB clients in this market are long
Oil.WTI ended last week marginally lower, with the decline marking a 5th successive weekly fall. However, price recovered somewhat into the weekend and there are signs that this recent move lower maybe close to ceasing. A large bullish engulfing candlestick on Thursday saw the two prior days declines recouped and the scale of the buying could be a potential early sign of a reversal. As long as price remains above last week’s low of 45.77 then a recovery could be in the offing.
A large bullish engulfing candlestick last Thursday may be the first sign of a move higher ahead for Oil.WTI. Source: xStation
Using a 4 hourly chart to look more closely at the recent price action, it is apparent that the market has moved above a falling trendline from the from the recent high above $50. One way of viewing this move is that of breaking the neckline in an inverse head and shoulders setup, with the head coming in at 45.77. Fibonacci retracements of the decline may offer possible levels to watch with the 38.2% at 47.48 coming in around last week’s high. A break above there would be a key bullish development. Should we get more upside ahead with the 61.8% fib retracment at 48.52 also coinciding with some prior swing resistance.
The market has breached a falling trendline and could be set for further gains ahead. Source: xStation
In terms of market positioning, the market sentiment tab on xStation reveals that 67% XTB clients with open positions in this market are long, looking for price to rise. With North America largely on holiday for the labour day extended weekend, it may be a quiet afternoon with lower than usual volume.