FXTimes Technical Update
Oil prices today broke above a wedge pattern that started on 4/11 at the 126.89 high. Since October, where prices failed to continue lower, the market has flattened. The October rally in fact is now extending today above the wedge pattern with strong price action. The RSI is at 60, a break above which reflects a loss of bearish momentum established during the declining wedge. Note that it has not been able to break above 60 in the daily chart since the start of this wedge pattern.
However, we should not be so fast to turn bullish on oil. There is still heavy resistance going up to 116.10, 61.8% retracement as well as the bottom of the consolidation area from 7/8 to 8/2. A break above this is then a clearer sign of bullish breakout than today's price action. The next resistance is at the 78.6% retracement level reinforced by the fact the market found resistance near 120.80 back in May and also held the rally in July. Above 121, we open up 126.89.
The downside risk for now is held above the 107.50 support pivot. Below that, the market will look flat, with bearish short-term bias toward lows or near the 100 psychological pivot.