FxWirePro: WTI crude on verge of retracing 61.8% Fibos on flag patterns – Use OB pressures to cushion long hedge setup

The WTI crude oil price rallies have extended their recent recovery upto the current $76.26 levels. 

Technically,WTI crude on daily plotting forms flag pattern which is bullish in nature formed at $73.44 and $74.87 levels. For now, the 3rdflag pattern continuation is staged on a stern bullish candle with big real body at $76.65 levels.

The upswings are most likely to drag this bullish pattern on bullish DMA and MACD crossovers, the current prices spike well above DMAs.

While the consolidation phase breaks-out symmetric triangle resistance (refer monthly chart), as a result, the uptrend retraces more than 50% Fibonacci levels of the lows of February 2016 (i.e. $26.08) and the highs of May’2011 (i.e. $114.79 levels). That’s where, the trend seemed slightly edgy with occurrences of shooting star and hanging man formations.

Constructively, bulls bounce back well beyond EMAs and 50% Fibonacci levels and now on the verge of 61.8% Fibonacci levels.

Momentum and trend study: The prevailing uptrend to sustain upon bullish DMA and MACD crossovers. 

But both momentum oscillators (RSI & stochastic curves) signal overbought pressures at this juncture on both timeframes.

While energy prices sneaked past ($80 in case of brent and $76.24 in case of WTI) a barrel as mining nations like Russia and Saudi Arabia decided against mounting global production at a meeting in Algiers.

Recently, Saudi Arabia, one of the 14-member Organization of the Petroleum Exporting nations, and Russia, which is the charioteer for the 11 other associated oil producers, have reinforced that they intend to adhere to production quotas to which they agreed in late 2016.

Nevertheless, confining to these thresholds would imply that an extra 500,000 barrels a day would inflow into global energy markets to counterweigh the projected deteriorations once the lingering Venezuela’s economic crisis continues and as the Iran sanctions to reflect. While effects of dollar’s robustness on the oil price eases their pain of struggling OPEC producers, like Algeria, Nigeria and Venezuela. 

Overall, on trading grounds, it is good to capture minor price dips and buy at current levels for further upside traction upto $76.88 levels for the strict stop loss of $75.92 levels.

While on hedging grounds,we advocate initiating longs in WTI CME futures contracts with a view to arresting further upside risks.

Currency Strength Index: FxWirePro's hourly USD spot index is inching towards 142 levels (which is bullish), while articulating (at 09:40 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex