Yesterday in our analysis we observed the formation of a diamond pattern in crude oil. This technical figure confirmed the bearish move when WTI broke below 71.88. It is expected to continue declining to the support of 6/8 Murray around 68.75. You can review this analysis here and get some information.
Today at the beginning of the American session, WTI is trading at 69.97 with a bearish bias. It could find support at 2/8 of Murray around 68.75.
A factor that limits the advance of oil is the caution in the equity markets, given the concern about the Omicron variant. Stock markets are falling and WTI is highly correlated with these markets. Therefore, crude oil is expected to continue its downward trend for the next few days.
Another factor that could weaken crude in the short term is that the International Energy Agency said that the oil market returned to a surplus and shows possibilities of being left with an oversupply, as a result of the Omicron variant of coronavirus. An increase in crude inventories could push down to the level of 65.62.
According to the 4-hour chart, it is observed that crude is trading below the SMA of 21 and below the EMA of 200 located at 74.03. There is a possibility that its downtrend will continue until the end of the month. A pullback to the zone 21 SMA at 71.05 will be a good opportunity to continue selling with targets at 68.75 and 65.62.
A daily close above 71.40 would be a buy signal. Oil prices could rise to the 200 EMA located at 74.03 and up to the key level of 4/8 Murray at 75.00.
Our trading plan is to sell below 21 SMA located at 71.05 with targets at 68.75 and up to 1/8 Murray at 65.62. Conversely, a sharp break above 71.40 will be a positive signal to buy with targets at 75.00.
The eagle indicator has reached an extreme oversold level, and a technical correction in Crude Oil is expected in the coming days up to the bullish trend line.
Support and Resistance Levels for December 15 - 16, 2021
Resistance (3) 73.09
Resistance (2) 71.67
Resistance (1) 70.67
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Support (1) 69.17
Support (2) 68.04
Support (3) 66.67
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A trading tip for CRUDE OIL on December 15 - 16, 2021
Sell below 71.05 (21 SMA) with take profit at 68.75 (2/8) and 65.62 (1/8), stop loss above 71.55.
Buy above 70.00 (strong support) with take profit at 71.05 and 71.88, stop loss below 69.50.