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Technical analysis of Crude oil

Crude oil broke a long term uptrend line at the end of March and has been trading in a downtrend channel ever since as traders are starting to think of the likelihood of a solution between Iran and the West, rather than the unlikelihood of it. Following last week’s IEA report, that found that global oil suppliers have become less constrained in the past few weeks, even as US and EU sanctions on Iran are pushing Iranian crude off the market, and the agreement between Iran and the West to keep talking over the weekend in order to come to terms over Teheran’s nuclear program, it looks like there is room for further downside over the next few days. The market rose slightly on Monday bouncing from the recent lows at 100.58. At 103.51 this morning crude oil remains locked in the tight downtrend channel. With a bearish alignment of the 20 EMA below the 50 EMA and the MACD signal line below the zero line, the bears appear to have taken the control on the daily chart. Considering the negative line capping RSI and the MACD signal line set to cross below zero on the 4 hour chart, the bias remains bearish. As the bulls continue to be unable to break above key resistance at 104.74, short positions with target at the 100.00 are favoured. In the alternative scenario, a break above 104.00 could re-test the recent 2012 highs above 108.
Daily Chart

4 Hour Chart

Dafni Serdari
Market Analyst
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