Drilling into the price of oil

After the biggest surge since August 2015, it’s a good time to take a look at oil from a few different trading angles.

Oil
Source: Bloomberg

Weekly view

The weekly chart of WTI oil shows the significant resistance level of $52 still in play. The overall picture is bullish, with a significant reversal pattern in play starting from July – August 2015 and an inverse head and shoulder has developed. The right side of the chart has become complex, with an ascending pattern showing three significant swing lows. This type of pattern becomes important when three lows (shown on the chart) are not broken to the downside. Overall, this is a bullish setup.

The outside range set (3) has marked the low at short-term support, which is a very bullish sign.

Weekly view
Click to enlarge

Daily view

Taking a closer look at the daily chart, the $42.80 support level is established with three touches of this level. The market has now produced a higher low. This $45.00 level is now used and a longer-term stop loss point.

The daily chart has several hurdles to clear. From last night’s price action, the close above the 22 November high (the secondfailed retest ) is an important price outcome.

The first breakdown level of $50 is now the next point of price inflection for the bulls.

Oil daily
Click to enlarge

Hourly view

The hourly chart traded out of the consolidation above $45, the inside periods, and a place of indecision was confirmed with a close over the high (gives direction). The inside period is the small price range with a lower high and higher low than the immediate period previous. From a trading perspective, it’s the place where the buyers or sellers cannot move the price. Coming into the close, an engulfing reversal is shown and the current inside period is looking for a break either way. This range can be used for a stop loss level for short-term traders after the trade entry.

Oil hourly
Click to enlarge

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