Crude Oil Price Talking Points
The price of oil bounces back from a fresh yearly low ($20.52) and crude may stage a larger recovery over the coming days as the Relative Strength Index (RSI) is on the cusp of flashing a textbook buy signal.
Technical Forecast for Crude Oil: Neutral
The broader outlook for crude is encompassed with bearish indications as a ‘death-cross’ formation materialized in late February, with the 50-Day SMA ($47.57) crossing below the 200-Day SMA ($54.38).
The negative slope in the simple moving averagescast a bearish outlook for crude, with the recent series of lower highs and low in the price of oil triggering a break of the 2016 low ($26.05).
Oil Daily Chart
Source: Trading View
However, the recent series of lower highs and lows unravels as the price of oil bounces back from a fresh yearly low ($20.52), and crude may stage a larger rebound over the coming days as the bearish momentum appears to be abating.
Recent developments in the Relative Strength Index (RSI) raises the scope for a larger rebound in oil prices as the indictor breaks out of the bearish formation carried over from the previous month, with the oscillator on the cusp of flashing a textbook buy signal as it bounces back from oversold territory.
The move above the Fibonacci overlap around $25.40 (78.6% expansion) to $26.20 (100% expansion) brings the $31.00 (78.6% expansion) to $32.50 (50% expansion) region on radar, with the next area of interest coming in around $34.80 (61.8% expansion).
It remains to be seen if crude will fill the price gap from earlier this month amid the string of failed attempts to close above the $34.80 (61.8% expansion) region, with oil prices at risk of facing range bound conditions as the broader outlook is encompassed with bearish indications.
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— Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong.