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Chart Of The Day: Can Oil Convincingly Break $76 Resistance?

By Investing.com (Pinchas Cohen/Investing.com)CommoditiesOct 04, 2021 09:36
ca.investing.com/analysis/chart-of-the-day-can-oil-convincingly-break-76-resistance-200489559
Chart Of The Day: Can Oil Convincingly Break $76 Resistance?
By Investing.com (Pinchas Cohen/Investing.com)   |  Oct 04, 2021 09:36
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After a spectacular September, this morning, ahead of the OPEC+ monthly meeting, the price of oil fluctuated. WTI wavered between gains and losses but ultimately remained little changed.

The cartel of global oil producers is expected to discuss raising production levels from lower, pandemic output levels currently in force, in order to keep the price of the commodity from rising steadily if demand increases.

With US shale producers still lagging on production, OPEC+ remains the only game in the market. Thus today's policy decisions are likely to determine the direction of oil's price, which appears to have reached an impasse.

Oil Daily
Oil Daily

The commodity is currently forming an intra-day hanging man, lining up with the High Wave candle produced on Tuesday. That candle, which demonstrates trader indecision and even fear amid a loss of bull or bear leadership, developed at the same level of the previous peak, hit on July 6.

As things stand, the price could break through the $76 levels, extending crude's uptrend, or it could move sideways and potentially top out, if it falls below the Aug. 23 low of $61.74, guarded by the 200 DMA.

Trading Strategies

Conservative traders should wait for the bull-and-bear tug of war to end with a clear winner, with the price either making new highs or falling below the short-term uptrend line and rising channel since the Aug. 23 low. The direction would be determined when the price either closes above $80 or below $70. Then, they’d wait for a return-move that finds support or resistance, depending on the direction.

Moderate traders would wait for a similar trend resolution, perhaps even for the corrective rally or pullback, much like conservative peers, but for a better entry, if not for confirmation.

Aggressive traders could jump in if the price finishes the day above last Tuesday’s high wave candle or below last Thursday’s close.

Trade Sample – Aggressive Long Position

  • Entry: $77
  • Stop-Loss: $76
  • Risk: $1
  • Target: $80
  • Reward: $3
  • Risk:Reward Ratio: 1:3

Trade Sample – Aggressive Short Position

  • Entry: $73
  • Stop-Loss: $74
  • Risk: $1
  • Target: $70
  • Reward: $3
  • Risk:Reward Ratio: 1:3
Chart Of The Day: Can Oil Convincingly Break $76 Resistance?
 

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Chart Of The Day: Can Oil Convincingly Break $76 Resistance?

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