Bulls are taking a breather after strong rally
WTI oil price is consolidating on Tuesday, following Monday’s strong rally of nearly 5% and keeping traction for possible further advance.
Crude prices received strong support from supply disruption in Iraqi Kurdistan, as Iraq was forced to stop exports of about 450.000 barrels per day, easing worries about crisis in banking sector, which sparked cautious optimism and revived demand for riskier assets and signs of recovering demand from China.
All these factors contributed to improving sentiment, which strongly lifted the price on Monday, registering the biggest daily gains since Nov 4, 2022.
On the other hand, technical picture on daily chart has improved, but 14-d momentum indicator is still in the negative territory and stochastic is overbought, sending an early warning that bulls need more evidence for confirmation.
Near-term action is on track for the second consecutive daily close above 50% retracement of $80.99/$64.34 ($72.66) and also cracked falling 20DMA ($73.18, which would add to positive signals and open way for test of next pivotal barriers at $74.30 (30DMA) and $74.63 (Fibo 61.8%).
Caution on return below $72.66, which would generate initial negative signal of possible recovery stall, but near-term bias will remain bullishly aligned while dips hold above $70.70 (broken Fibo 38.2% of $80.99/$69.34).
Loss of psychological $70 support would signal that bears regained control and risk continuation of larger downtrend.
Res: 73.77; 74.30; 74.63; 76.33
Sup: 72.66; 71.64; 70.70; 70.00