Fairly quiet market leading into the NFP and US unemployment data tonight. Crude oil has seen a steep pullback this week due to the covid variant concerns and after OPEC’s suggesting that it is going to continue the output increase. However, price action has stabilized since then and it looks as though a technical and bullish breakout to the upside is in play. The IGCS chart from December 1st is showing crude oil price action compared to net long/short positioning. As you can see the net long/short positioning tends to have an inverse relationship with the price of crude oil. Currently, on this dip, net long positions have reached higher peaks than during the previous sell-off. This is indicating buyers are stepping into the market and a technical bounce may occur.
Crude Oil 4 Hour Chart
There has been a technical bounce at the double bottom zone and technically speaking a head and shoulders formation is possibly setting up. MACD is showing a bullish divergence as sellers are running out of momentum which would also align with the IGCS chart above.
Crude Oil – 1 Hour Chart
Falling wedge breakout and a bullish divergence on the MACD indicate a move to the upside.
Trade Setup: BUY market execution, current price 67.80 (focus markets), stop loss 63.20 and take profit target 76.50.
Stop loss: 460 pips
Take profit: 870 pips