OIL PRICE RALLY TRIGGERS OVERBOUGHT RSI SIGNAL AHEAD OF OPEC MEETING
The price of oil clears the February 2020 high ($54.66) since itextends the up trend established in November, along with the OPEC Joint Ministerial Monitoring Committee (JMMC) meeting scheduled for February 3 might result in higher oil costs as Secretary General Mohammad Barkindo insists that the category and its allies”stand ready to take any required actions.”
However, fresh data prints coming out of the US could drag the price of oil as crude inventories are expected to raise 0.367M in the week ending January 29 after suddenly contracting 9.91M the week prior, and signs of slowing demand could encourage OPEC to regulate the energy market throughout 2021 since Saudi Arabia remains on track to decrease distribution by 1 million b/d before April.
Subsequently, OPEC and its allies might continue to highlight its commitment to the Declaration of alliance (DoC) as”the return of stricter lockdown measures and growing uncertainties have caused a more fragile economic recovery that is expected to carry over into 2021,” and the amount of oil may continue to retrace the decrease from the 2020 large ($65.65) as US production remains at its lowest level since 2018.
With that said, the technical outlook remains constructive as crude continues to trade above pre-pandemic levels, and the amount of oil can continue to monitor the up trend established in November although the Relative Strength Index (RSI) fails to show a similar behavior.
OIL PRICE DAILY CHART
Keep in mind, crude broke out of the range bound price action from the third quarter of 2020 following the failed effort to close below the Fibonacci stride around $34.80 (61.8% expansion) to $35.90 (50% retracement), and also the amount of oil may continue to retrace the decrease from the 2020 large ($65.65) as both the 50-Day SMA ($48.86) and 200-Day SMA( $39.74) set a track that a positive slope.
Crude has broken out of this range bound price action taken over from the end of January to expand the upward trend established in November, but the Relative Strength Indicator (RSI) has neglected to keep up as a fracture of trendline support emerged before February.
Nevertheless, recent developments in the RSI provides a constructive outlook as the oscillator climbs above 70, with the push into overbought territory likely to be accompanied by higher oil costs like the behavior seen earlier this season.
The Fibonacci rate around $56.00 (23.6% expansion) to $56.70 (61.8% growth ) sits on the radar as the price of oil bounces back from station support, together with another area of interest coming in about $58.00 (50% growth ) to $58.40 (23.6% growth ).
