WTI posts fresh 7-year highs above 85 USD
18 January 2022
Oil pushed to new multi-year highs today, rising above 85 USD, completely ignoring rising US yields or strengthening US dollar.
Nevertheless, the 85 USD level is still considered a significant resistance, and some traders might be tempted to take some profits from the recent rally, considering how steep it has been.
Additionally, oil now looks overbought on the daily chart, and smaller time-frames also signal overextended conditions. Therefore, a correction could occur over the following days.
It is hard to define supports in such a vertical bull market. However, the 80 USD psychological threshold could act as one. As long as the price trades above it, the medium-term outlook seems bullish.
Alternatively, should oil rise above 85 USD, we might see a strong rally toward 90 USD.
Overall, sentiment seems negative in the markets as stocks are falling, USD is strengthening, and yields are rising. In such an environment, oil should underperform and not rise to multi-year highs.