What Can We Expect from The Price of Oil?

Sideways trend on the oil continues. The price is more or less in the same place as it was in the middle of December. We are slowly getting to a point when traders will have to decide if they want to go up or down so for price action there is an opportunity for a nice breakout here, which potentially can set the trend for the next few weeks.

From the fundamental point of view, we do have OPEC countries, which are rather committed to the well known agreement. On the other side, we have the rest of the world, which is happy with the upswing started in the middle of the 2016 and they are actually producing more, using higher prices for the bigger revenue. That on the other hand, stops the price from growing and the situation can be summarized that the OPEC countries are limiting their output and non-OPEC countries are rising production, benefiting from this and keeping the overall global output relatively stable.

Technically we are locked inside a sideways trend, which can be named as a ascending triangle. To be fair, this formation created after an upswing, suggest the bullish breakout. The closest resistance here is 54.7 $/bbl and as long as the price is below this level, buy signal is not triggered yet.

Currently, after the failed attack on the level mentioned above, the price is testing the lower line of the triangle. Bearish breakout here, can postpone the bullish dream for a while and can be a first step for a downswing. Why not a definite sell signal? Well, below the black line, we do have few more potential supports created by the lows from the past few weeks. Definite sell signal will be triggered once the price will break the last important horizontal support on the 53,3 $/bbl. So for now, the patience is gold, black gold.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis