Crude Oil Technical Analysis - October OutlookCrude oil is showing a notable recovery from its recent lows, currently trading around the $72 mark. A few key observations based on the price action and indicators:
Price Pattern and Trend:
The chart shows a classic descending wedge pattern, which signals a potential bullish reversal. The breakout from the wedge is accompanied by a price surge above the 20-day and 50-day moving averages, suggesting a short-term trend change.
Key Support Levels:
Immediate Support : Around $70.64, marked by the breakout level.
Strong Support : At $68.23, where significant buying interest has been observed in the past, reinforced by a bullish consolidation zone.
Resistance Levels:
First Resistance: $72.11, which has been tested, with potential room for the price to move higher if momentum sustains.
Critical Resistance : $77.23, which coincides with a strong historical supply zone. A close above this level would signal further bullish momentum
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Volume Profile Insight:
A noticeable shift in the volume profile near the $70 mark suggests accumulation by institutional investors, hinting that buyers are stepping in to defend this level.
RSI Indicator
: The Relative Strength Index (RSI) has bounced back from oversold levels and is now showing early signs of positive divergence, supporting the case for an upward move.
Geopolitical Factors:
With rising tensions in the Middle East, as highlighted in the annotation, traders and investors are pricing in potential supply disruptions, contributing to the recent spike in oil prices.
Conclusion:
Oil prices may continue to rise in the short term, with $72.11 being a key level to watch. If sustained above this, the next target would be $77.23. However, if prices fall back below $70, we could see a retest of support at $68.23. Given the geopolitical uncertainty, traders should remain cautious of potential volatility.
