- The latest developments in the Middle East affect oil prices
- An inverted head and shoulders formation could encourage to enter a long in the long-term
- A key support line seems to be placed in the vicinity of $51.7
There is no doubt that the latest developments in the Middle East have steered oil prices of late. We’ve had some clashes nearby Kirkuk (Iraq) which have been a ramification of the Kurdistan Regional Government’s independence referendum as the country is one of the biggest oil producers in the world and the Kuridsh-controlled region in the north of the country produces a chunk of Iraqi oil. On top of that, oil prices have been shored up by the upbeat outlook illustrated by the OPEC in its latest monthly report. What’s more, a technical analysis offers some signals which could be supportive of the commodity price.
WTI oil prices seem to have substantial space to continue recovering at least from the longer-term point of view as a more notable resistance cannot be found until $62.8. Notice that this level presents the same size of a corrective move which took place a few years ago. Otherwise, an inverted head and shoulders pattern (SHS) might be spotted at a monthly interval where a neckline could constitute an important support for buyers.
On the weekly time frame one could notice that the price has been able to break above the neckline being a part of the potential inverted SHS formation which could bode well for buyers as the price is expected to slip into an ascending channel anew. Taking into account that the price has stayed above $42.7 one could predict that a continuation of gains could take place even beyond this year’s peak placed at $55.
The broken neckline in conjunction with a bullish gap made at the opening of this week appear to be the closest support area. Moreover, the three moving averages confirm an uptrend as well while local resistances can be found at $53.45 and $54.35 respectively.
An intraday time frame suggests that $51.9 remains a support as the price has already failed to break it to the downside while the more important level to watch is still $51.9 which coincides with a size of the largest pullback within the ongoing upward trend. Once the price retreats towards this level, it could result in a closure of a weekly bullish gap. Should this area is broken, a further gain could be questionable.