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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.

 

original-size.webpSource: Bloomberg

 

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

 

original-size.webpSource: 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

 

original-size.webpSource: TradingVIew

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. 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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