Market update: crude oil prices soar, mostly sealing the fate of a fourth monthly gain

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Crude oil prices all set for a fourth consecutive monthly gain; still-bearish retail trader exposure offers a bullish outlook and prices just barely break above a key zone of resistance.

 

Source: Bloomberg

 

Oil Price of oil Shares Commodities Market sentiment Petroleum

Daniel Dubrovsky | Currency Analyst, DailyFX, San Francisco | Publication date: Thursday 28 September 2023 04:32

Crude oil sentiment outlook: bullish

Crude oil prices rocketed higher on Wednesday, soaring 3.6 percent in the most aggressive day since early June. The commodity is on course for a fourth consecutive monthly gain. Meanwhile, retail traders continue increasing bearish exposure.

This can be seen by looking at IG Client Sentiment (IGCS), which tends to function as a contrarian indicator. According to IGCS, only about 30% of retail traders are net-long crude oil. Since the majority are biased to the downside, this continues to hint that prices may rise down the road.

Meanwhile, upside bets have decreased by 10.3% and 16.32% compared to yesterday and last week, respectively. With that in mind, overall exposure and recent changes offer a stronger bullish contrarian trading outlook.

IG Client Sentiment chart

 

Source: DailyFX

Crude oil technical analysis

On the daily chart below, WTI has just barely closed above the 93.72 – 92.43 resistance zone from highs seen in November.

That has opened the door to extending the uptrend since earlier this year, exposing the 100% Fibonacci extension level at 95.63. Just beyond that is the August 2022 high of 97.65, which may hold as key resistance.

But, note that there is a negative RSI divergence showing that upside momentum is fading. In the event of a turn lower, dropping through the 93.72 – 92.43 former resistance zone places the focus on the 20-day moving average (MA).

Just below that is the 61.8% extension at 88.75.

Crude oil daily chart

 

Source: TradingVIew

 

 

 

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