WTI oil experienced serious losses in trading last week. Yesterday the bears tried to continue their decline, but this time their efforts were not enough, and as a result, Monday's trading ended with a gain of more than 1%. It's a good result, but it is just a small compensation for last week's drop of 7.5%. It is necessary to fix the result, and that is what the oil "bulls" will try to do within the next few days.
Unexpected support for the quotations of "black gold" was provided by the head of the International Energy Agency (IEA) Fatih Birol, who said that China will push global oil demand to a record high level this year, and early signs are already showing that the world's second largest economy is recovering. In recent years, IEA forecasts have rarely been optimistic about the prospects of the oil market, but the situation seems to have changed to some extent.
The earthquakes in Turkey and Syria are also beneficial for oil prices. Turkey decided to stop the operation of the Jeyhan export terminal on the Mediterranean Sea coast, through which supplies from Iraq and Azerbaijan come. The terminal provides about 1% of the world's oil supply, which is a very significant volume.
From a technical point of view, yesterday's candlestick formed a "hammer" pattern on the daily chart of WTI oil - a sign of trend reversal. The fact that the body of the "hammer" was formed not on the new local minimums, but inside the body of the previous candlestick, reduces the significance of the "hammer" a bit. Nevertheless, it is an indication that the number of buyers increases significantly when the price of WTI crude oil drops below 73.
The nearest growth target for WTI oil is 77.7 level. And it is reasonable to open a long positions near the 75 level. The support at the level of 73.1, where the Stop loss can be set, protects the price from further downward movement.
The following trading strategy option can be suggested:
Buy WTI oil in the range of 75-75.5. Take profit – 77.7. Stop loss – 73.1.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.