Anyone hoping to catch the trend on crude oil?
I’m seeing a potential channel resistance test lined up early this week!
How’s my favorite commodity looking at the start of the new year?
Crude oil seems to be feeling the bullish vibes early on, as price just held its ground above the mid-channel area of interest on the 4-hour time frame.
With that, bulls could set their sights on the next upside barrier at the channel top around the $84-86 per barrel levels.
However, technical indicators are still hinting that the downtrend is more likely to resume than to reverse.
The 100 SMA is below the 200 SMA to indicate that bearish momentum is present, although the narrowing gap between the two is hinting at a potential turnaround.
Meanwhile, Stochastic is heading higher to show that buyers have the upper hand. The oscillator has some ground to cover before reflecting overbought conditions, but I’d look out for a move lower once resistance levels are being tested.
If the ceiling holds, crude oil could make its way back down to the channel support at the $70 per barrel region or at least until the middle of the channel again.
Don’t forget that the OPEC-JMMC meetings are lined up this week, so any strong calls to adjust their production levels might impact crude oil price action.
Also, headlines supporting the view that the Chinese economy is gearing up to reopen soon might lift risk assets like commodities, so keep an eye out for those as well!
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