After three days of steady decline in oil prices, WTI oil bulls are now licking their wounds around the $79 mark.
The upside reversal that was seen on Thursday helped RSI bounce on its neutral mark. If the bulls can snap the $83.80 mark, then they can aim for the strategically important $85 mark.
However, the negative slope in the Stochastics and weakness in the MACD are forcing the oil bulls to adopt a cautious approach and refrain from a highly aggressive move. Adding to their anxiety is the falling red Tenkan-sen line.
The latest upswing in WTI oil futures have not been strong enough to completely swipe away all negative risks of bears gaining strength. Hence it remains to be seen whether WTI can sustain the gains it made. What makes its sustenance challenging is the resurfacing of Chinese property sector concerns and cautious trading approach adopted by traders ahead of nonfarm pay roll data release.
That being said, Goldman Sachs’ analysis gives a different opinion where in their recent note they explained that oil prices may continue to hold on to a bullish view neutralizing any unfavourable impact from any US SPR release.
As discussed above, if the bullish trend continues, then the next level to look for is $83.826, following which a further surge ahead can be anticipated. However, to mitigate the downfall risks, one should wait for a clear extension above the trend line.