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Market update: WTI crude oil price may extend push higher as retail traders turn bearish


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Crude oil prices extend gains from last week, while more retail traders are becoming bearish and investors look to the possibility of WTI clearing resistance.

 

original-size.webpSource: Bloomberg

 

 

Daniel Dubrovsky | Currency Analyst, DailyFX, San Francisco | Publication date: Thursday 31 August 2023 

Crude continues its winning streak

Crude oil prices extended higher over the past 24 hours, continuing a near-term winning streak since last week. In response, retail traders have been cautiously increasing downside exposure. This can be seen by taking a look at IG Client Sentiment (IGCS), which can at times function as a contrarian indicator. With that in mind, could WTI continue rising from here?

Crude oil sentiment outlook: bullish

According to IGCS, about 50% of retail traders are net-long crude oil. With the overall balance of exposure almost perfectly split between upside and downside bets, the near-term changes in positioning could offer a better outlook of how sentiment could inspire price action. In this regard, upside exposure has increased by almost +3% compared to yesterday and +6% versus last week. With that in mind, recent changes in positioning hint that the price trend may soon reverse higher.

IG client sentiment: crude oil

 

original-size.webpSource: DailyFX

Market analysis: WTI crude

On the daily chart below, WTI has climbed to the 81.56 resistance zone established earlier in August. Clearing this point, as positioning is hinting at, could open the door to revisiting the August peak of 84.84. That would also undermine the breakout under the rising trendline from late June.

Meanwhile, a bullish Golden Cross remains in play between the 50- and 100-day moving averages. This has been offering an upside technical bias. In the event of extended losses, keep a close eye on the 38.2% Fibonacci retracement level of 77.96. Clearing this line would place the focus on the moving averages, which may reinstate the upside technical bias.

Crude oil daily chart

 

original-size.webpSource: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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