Oil Price Forecast: Crude Technical Outlook Mired by RSI Sell Signal


Oil Price Forecast: Crude Technical Outlook Mired by RSI Sell Signal

The cost of oil attempts to retrace the decrease from the monthly high ($62.29) since it continues to track the climbing station established in November, but a textbook sell signal has emerged at the Relative Strength Index (RSI) as the oscillator falls back from overbought territory and falls under 70.

The recent weakness in the price of oil appears to be a indication of fatigue rather than an alteration in the wider trend as it brings from station immunity, and crude prices may consolidate over the remainder of the month since the bullish momentum abates, with the RSI registering a reading under 70 for the first time since the start of February.

It remains to be seen if new data prints coming out of the US will prop up oil prices as crude inventories contract for the fifth consecutive week, with stockpiles narrowing 7.258M in the week ending February 12, while oil production remains at its lowest level since 2018.

The upgrade from the Energy Information Administration (EIA) showed crude production slipping to 10,800K from 11,000K in the week ending February 5, and signs of stronger ingestion paired with ongoing weakness in crude output signal may keep oil prices payable much as the Organization of the Petroleum Exporting Countries (OPEC) Secretary General, Mohammad Barkindo, pledges to"act in the interests of both producers and consumers."

Barkindo emphasized that OPEC and its allies"seek to contribute to greater stability, more predictability and improved transparency" while talking at the 11th IEA-IEF-OPEC Symposium on Energy Outlooks, and key market themes may keep the price of oil afloat before another OPEC Joint Ministerial Monitoring Committee (JMMC) assembly on March 3 as Saudi Arabiaremains on track to reduce distribution by 1 million b/d before April.

With that said, the price of oil can continue to retrace the decrease 2020 large ($65.65) since it still tracks the upward trending channel based in November, but crude costs may face a larger correction over the rest of the month as the Relative Strength Indicator (RSI) falls straight back from overbought territory to indicate that a textbook sell signal.

Keep in mind, crude broke out of this scope bound price action from the third quarter of 2020 after the failed attempt to close below the Fibonacci stride around $34.80 (61.8% expansion) to $35.90 (50 percent retracement), along with also the price of oil may continue to retrace the decline from the 2020 large ($65.65) as equally the 50-Day SMA ($52.78) and 200-Day SMA( $42.89) monitor a positive slope.
More recently, crude has busted from the scope bound price action taken over in the end of January to expand the upward trend established in November, but the Relative Strength Index (RSI) has failed to maintain up as a fracture of trendline support emerged ahead of February.
However, improvements in the RSI offered a constructive outlook since the oscillator held above 70 because the start of February, but a textbook sell sign has emerged moving into the close of the month since the oscillator falls back from overbought territory.
The price of oil transactions back within the confines of the ascending channel after failing to break/close over the Fibonacci overlap around $62.70 (61.8% retracement) to $62.90 (78.6% growth ), and crude might continue to merge over the rest of the month since the $58.00 (50% growth ) to $58.40 (23.6% expansion) area appears to be offering near-term support.
But, absence of momentum to hold over the $58.00 (50% expansion) to $58.40 (23.6% expansion) region may push the purchase price of oil towards station support, which lines up with all the overlap about $56.00 (23.6% growth ) to $56.70 (61.8% expansion).

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