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Technical analysis of Oil

Crude oil has been trading in a strong uptrend movement since October. After smashing through the $100 level it currently holds steady above $104, as the Middle East continues to offer headlines that push the prices higher and Iran continues to argue with the West about nuclear ambitions in Gulf. As the threat of an armed conflict keeps the oil market on edge, emerging markets and the massive demand from India and China could keep the market well bid. Adding to that the comments by Federal Chairman Bernanke that opened the door for more quantitative easing and sent the US Dollar to its lowest in three weeks, it looks like oil has the wind in its sails.
The recent action in the oil market has been tight since end February with strong support at 104.54 but with signs of a bullish bias. With a bullish alignment of the 20 EMA over the 50 EMA and the RSI hovering above 50 throughout the month on the daily chart, the bulls look set to get the control of the market. The picture is also bullish on the 4 hour chart with the MACD signal line flipping above zero and the RSI steady around the 50 level. As the US Dollar index remains in a downtrend channel, this favours long positions in oil further with near term target at 109 and long term target at 112. In the alternative scenario, a break below key support by 104 could open the door for a move to the downside towards 101.25.
Daily Chart

4 Hour Chart

Dafni Serdari
Market Analyst
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The comment in this blog is the personal opinion of the contributors and not Intertrader.com. The content does not constitute financial, investment or tax advice. You are advised to discuss your specific requirements with an independent financial adviser prior to entering into any bet. Intertrader.com is not responsible and disclaims any and all liability for the content of comments written by contributors to the blog, and the content of any third party sites linked from this blog.

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