Oil rally takes a break
What happened?
WTI oil surged above $52.00 for the first time since February. Why? Firstly, Joe Biden pledged to inject trillions of dollars into the US economy to fight against the Covid-19 effect. The market reaction after the announcement offered a boost to crude oil. Secondly, Saudi Arabia pledged to make deeper oil output cuts. Finally, the recent vaccine breakthroughs improved the sentiment and added optimism for a recovery in oil demand.
What’s next?
Crude oil has stopped after last week’s strong rally as investors are assessing the increased demand for the US dollar. A stronger greenback has made raw materials as crude oil more expensive. Therefore, oil prices plummeted.
Technical tips
When WTI oil closed above $52.00, the 14-period RSI broke through the 70 mark, signaling the price entered the overbought zone. In addition, a bearish crossover happened – the MACD indicator started declining and crossed the signal line to the downside. As a result, WTI oil corrected down. If WTI oil dropped below Friday’s low of $51.00, the way down to the next support of $50.00 will be clear. On the flip side, the move above the resistance of $52.70 will push oil to the high of February 20 at $54.00.
To trade WTI with FBS, you need WTI-21G, which expires January 19.
