Will We See Resistance Soon?

In a previous post about crude prices, I mentioned the areas where we might see some selling. Currently, the price of crude is just below the first area of resistance that I discussed. Check out the post in the link directly below.

Oil prices have been on a very sharp rally for the past few months. Policy from Opec has been the main driver of this price spike. The macroeconomic situation is still very dovish for crude prices. The only slight data point that caused a little selling today were higher than expected crude oil inventories. I dont think one data point like this will put a haut to the rally. But oil futures traders are sitting on some very nice profit so any hawkish data point will almost surely inspire a little selling at least.

In the chart directly below I have highlighted the current trend and the nearest areas of resistance. Most people Ive heard from are saying $93.00 is the next level to watch. But the $89.00 price point is a major fibonacce retracenet level. Many investors use these levels as support/resistance levels, so there could possibly be some selling at these price points.

Take note of how steep of an upward trend crude has been traveling in. Price can not only go straight up. In a healthy rally, you will see occasional selling or profit taking. With the short-term indicators in oversold territory, I would not be surprised to see some selling in the near future.

A tiny gap in price is usually nothing to worry about. But the last time we saw any gap in oil prices was in mid-August. This was the last time we saw some selling. This was also the first consolidation phase in the current rally that we are in. Today's gap down coincidently appeared just near the $89.00 fib level. Like I said, this is probably nothing. But it is something to take note of if you follow the fib levels.

From a macro standpoint, I don't personally see any reason to be bearish towards oil. But the short-term picture is telling me that there might be a little profit take coming soon. If it were me, I definitely would not sell my oil investments yet. But I might want to prepare to cover my trade for another possible consolidation phase or even a little downside.

As always, this is not investment advice. Good luck trading. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Give your investments time. Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend.