In the American session, crude oil is trading around the line of 5/8 Murray located at 78.12. This level represents a range zone. In the next few days, it is likely that below 78.12 there will be some technical correction according to the eagle indicator that is showing a negative signal and the overbought market.
Since December 20, crude oil has been making a technical rebound. It has accumulated a gain of more than ,pips, which is likely to be a technical correction at least until the EMA 200 located at 74.19 in the coming days.
Oil production is expected to be restored in all exporting countries. Thus, WTI could come under downward pressure due to the increase in barrels of crude oil and oversupply, that could cause the price to fall to the psychological level of 70.00.
According to a Russian news outlet, oil production is expected to be restored to 85% in 2022, from the maximum level of cut of May / June 2020 as part of the agreement with the Organization of the Petroleum Exporting Countries and its allies (OPEC +).
OPEC and its allies agreed on Tuesday to maintain an increase in their production quota, expected to be 400,000 barrels per day of crude for February. This data is expected to put downward pressure on WTI or keep the upside limited below 78.12.
Undoubtedly, these data could be negative for crude oil and we could see a downward movement in the next few days towards the level of 74.19. If this level is broken, WTI could fall to the level of 71.88 and to the psychological level of 70.00.
Our trading plan for the next few hours is to sell below the 5/8 Murray around 78.12, targeting the 21 SMA at 76.51. If the downward pressure prevails, we could continue selling with targets at 4/8 of Murray around 75.00 and up to 74.19 (200 EMA).
Support and Resistance Levels for January 05 - 06, 2022
Resistance (3) 81.25
Resistance (2) 79.92
Resistance (1) 78.77
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Support (1) 76.83
Support (2) 76.04
Support (3) 75.22
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Scenario
Timeframe 4-hours
Recommendation: sell below
Entry Point 78.12
Take Profit 76.51 (21 SMA), 75,00 (4/8)
Stop Loss 78.77
Murray Levels 75.00 (4/8), 78.12 (5/8), 81.25 (6/8)
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Alternative scenario
Recommendation: Sell if breaks
Entry Point 76.51
Take Profit 75.00, 74,19 (200 EMA)
Stop Loss 77.05
Murray Levels 71.88 (3/8) 68.75 (2/8)
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