In our daily analysis, we had pointed out the possibility that crude could cover the GAP located at 66.22. You can review this article through this link and get some details regarding this strategy.
Crude oil is trading around 71.59 above the psychological level of 70.00 and above the 21 SMA. WTI is showing a bullish bias and it is likely to continue the uptrend until it finds resistance at 4/8 of Murray around 75.00.
On December 3, crude oil left the gap at 66.22 and another gap at the beginning of the Asian session this week at 70.28. Both gaps were covered this week, which increases the outlook that crude oil in the coming weeks could continue its upward trend to the level of 5/8 Murray around 78.12.
On December 2, oil reached the low of 0/8 of Murray around 62.85 and from that point it rebounded to the high of 73.12. From this sequence of lows to highs, crude fell to 61.8% Fibonacci at 66.12. This correction that coincides exactly with the Fibonacci level could signal a positive outlook for crude for the next few weeks.
Therefore, while crude is trading above the psychological level of 70.00, it is expected to consolidate around this area and below the EMA of 200 located at 73.11. A sharp breakout and consolidation on daily charts above 73.11 could accelerate the bullish move with targets at 75.00 and up to 78.25.
The International Energy Agency (IEA) reported that the effects of the Omicron variant on international travel will cause an oversupply in the oil market for the beginning of the next year.
A sustained increase in supply, combined with a reduction in demand, will cause supply to exceed demand starting this month, according to the IEA's monthly report.
In the medium term, crude is likely to stay under strong downward pressure. However, a daily close above the 200 EMA located at 73.11 could change the outlook for crude and we could see a recovery to the zone of 84.00.
Support and Resistance Levels for December 22 - 23, 2021
Resistance (3) 73.43
Resistance (2) 72.33
Resistance (1) 71.88
----------------------------
Support (1) 70.45
Support (2) 69.36
Support (3) 67.47
***********************************************************
A trading tip for WTI on December 22 - 23, 2021
Buy in case of a rebound at 70.07 (21 SMA) with take profit at 73.11 (200 EMA) and 75.00 (4/8), stop loss below 69.25.