The price of Crude oil #CL, is trading at 67.19 at the time of writing in the zone of 7/8 murray and strong resistance with a probability of a correction in the short term.
The #CL oil price has got trapped in a range throughout this month from the level of $ 61 to the resistance zone of $ 67. The lack of direction and indecision of the market can be attributed to the presence of opposing catalysts.
The weakness of the US dollar (USDX) and the reactivation of activity in both the United States and the Eurozone can be considered positive variables for the price of Crude Oil (#CL).
A negative variable may be the possibility of Iran injecting more supplies into markets and lower demand for crude from India in the face of the second wave of COVID-19.
On the chart we can see that crude oil, #CL, is in a resistance zone above the 21 SMA that acts as a dynamic support, trading within an uptrend channel on 4-hour charts.
In view of the fact that the Crude Oil, since May 20, is in a short-term bullish phase, it is likely to be entering an overbought period. Since the eagle indicator is showing a negative divergence, it is likely that there will be a pullback to the 21 SMA and 6/8 murray level which is now strong support.
This 6/8 murray level and the 21 SMA could give Crude Oil a new upward momentum, as the ascending wedge pattern would have its target at 68.75, a key level that is located at the 200 EMA in daily charts.
Conversely, a break below 6/8 of murray and the break of the uptrend channel could be a good sell signal with targets at the 200 EMA located at $ 63.91.
Our recommendation is to sell, only if it consolidates below 7/8 murray around 67.20 with targets at 66.20 and buy around 66.00 with a further rally to 68.75.
Support and Resistance Levels for May 28 - 31, 2021
Resistance (3) 68.79
Resistance (2) 67.84
Resistance (1) 67.35
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Support (1) 66.69
Support (2) 65.91
Support (3) 64.96
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Trading tip for Crude Oil #CL, for May 28 - 31, 2021
Sell below 67.20 (7/8 of murray), with take profit at 66.20 ( SMA of 21 and 6/8), stop loss above 66.60.
Buy if rebound around 66.20 (6/8 of murray SMA 21) with take profit at 67.20 and 68.75 (8/8), stop loss below 65.85.