Initial signs of reversal but the downside to remain vulnerable while 10SMA caps
WTI oil priced rose to new-week high on Friday, in extension of strong rally previous day, sparked by report that US tariffs on Mexico might be delayed.
Additional support to oil price came on Friday from comments of Saudi oil minister, who said that OPEC is close to extend production cut deal which expires at the end of this month.
The members of the cartel have an agreement which needs to be verified by non-OPEC oil producers before the final decision of rollover of agreement.
Thursday’s positive close of the day was the first since 27 May and generated bullish signal on formation of bullish outside day pattern.
Daily stochastic heads north after reversing from oversold territory and supports recovery scenario, but warning of recovery stall on rising bearish momentum and daily MA’s in negative configuration, should not be ignored.
Fresh bulls need more evidence that would be provided by break and close above falling 10SMA ($55.08) and action below here would be seen as extended consolidation and would keep the downside vulnerable.
Larger bears are taking a breather above cracked key supports at $52.64 (200WMA) and $51.61 (Fibo 61.8% of $42.36/$66.58) clear break of which would generate strong bearish signal.
Res: 53.81; 54.60; 55.08; 55.85
Sup: 52.64; 52.10; 51.61; 51.17