Last week week was a challenging one for oil traders with daily oil prices fluctuating between the $77.60 high and the $69.85 low of Friday, and ending the week with a narrow spread downbar but with a deep wick to the upper body suggesting a considerable degree of bearish sentiment. The only positive we can take from the weekly chart is that crude oil seemed to find some support both from the 40 week moving average and also from the start of potential support in the $71.50 per barrel price region.
Moving to the daily oil chart the short term outlook remains bearish with Thursday’s wide spread downbar being pivotal in that all three moving averages were breached simultaneously. Friday’s candle, on the other hand, provides a degree of optimism closing only marginally lower but testing the $70 per barrel region with a deep lower wick indicative of some possible short term buying in the market. Technically on the daily oil chart the price action is now sandwiched between the 3 short term moving averages and the longer term 200 day moving average which was tested on Friday but held firm. This latter indicator is now key and should it be breached this week then we can expect to see a further fall in oil prices as a result, particularly if the support region now coming into play in the $71.50 area fails to hold. Overall the WTI contract ended the oil trading session at $71.89 having touched a high of $73.94 and low of $69.50. The Brent contract closed out at $70.30 having touched a high of $72.52 and low of $67.87.
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