The WTI futures (NYMEX: CL) are on track for an impressive four-session winning streak, surging to their highest point in nearly three months. The catalyst for this ascent is the resurgence of supply concerns, amplified by escalating tensions in the Middle East. A recent drone attack in Jordan that claimed the lives of three US service members and heightened attacks by Houthi rebels in the Red Sea has injected uncertainty into the supply landscape.
However, it’s not just geopolitical factors at play. On the demand side, there’s a bullish undercurrent. The US has delivered stronger-than-expected economic data, and renewed stimulus in the Chinese economy is providing a boost to two of the world’s largest oil consumers. As we look ahead, the upcoming Federal Reserve interest rate decision and the release of Non-Farm Payroll data later this week have the potential to shape the price action. Meanwhile, vigilant traders will closely monitor any developments in the Middle East, adding an extra layer of intrigue to the unfolding narrative in the WTI futures.
Technical
On the daily chart, a breakout has occurred at the descending channel, forcing the futures above the 25-SMA (green line) and 50-SMA (blue line) toward the 100-SMA (orange line), where it now faces resistance near $79.04 per barrel (BLL).
The Fibonacci midpoint at $81.40/BLL could come under the spotlight if the futures can leg above this resistance. This psychological resistance could trigger a pivot to the downside or offer a path toward the 61.8% Fibonacci golden ratio at $84.62/BLL. Higher resistance is established at $86.47/BLL in the longer term if the bullish momentum is sustained above the golden ratio.
However, if the 100-SMA resistance prevents further upside, a pullback toward $75.59/BLL could occur. The 50-SMA converges with the 25-SMA near $73.60/BLL and could provide psychological support if the down move occurs. Any movement below these levels could signal a potential bearish momentum tilt, bringing lower support at $72.69/BLL into focus.
Summary
The WTI futures aim to extend its winning streak ahead of a crucial week of economic data releases. Resistance at $79.04/BLL could be a critical level to watch in the upcoming sessions to determine if the futures can breach the 100-SMA (orange line) to continue its bullish ascent.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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