WTI crude oil looks ready for more gains as price busted through a near-term resistance level at $62.50 per barrel. Price has since completed a retest of this broken resistance, which has held as support.
A test of the 38.2% Fibonacci extension level that lines up with the swing high is currently underway. Stronger bullish pressure could take this up to the 50% extension around $64 per barrel or the 61.8% extension at $64.32 per barrel. The 78.6% extension is close to $65 per barrel while the full extension is just below the $65.50 per barrel level.
The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. The gap between the moving averages is even widening to reflect strengthening bullish momentum.
RSI is pointing up to signal that buyers are in control, but the oscillator is also approaching the overbought region to reflect exhaustion. Stochastic is heading up but is dipping into the overbought territory to signal that buyers are tired and might let sellers take over. In that case, another dip to the area of interest might be in order.
Crude oil is keeping its head afloat thanks to Middle East tensions, shrugging off any gains in stockpiles or pickup in risk aversion on account of trade war concerns.
On Twitter, US President Trump once again threatened Iran, leading market watchers to expect tighter sanctions on the country’s oil exports. Recall that the US already withdrew waivers for Iranian oil exports to specific countries, which keeps a lid on global supply and forces buyers to source crude oil elsewhere.
Escalating tensions could keep oversupply concerns in check as strikes could target drilling facilities and pipelines, further dampening global supply.