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

[MongiIG]

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.

 

Source: Bloomberg

 

WTI Commodities Shares Forex Market sentiment Petroleum

 

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

 

Source: 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

 

Source: TradingView

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