Technical Analaysis of Crude Oil
Oil prices were given a strong boost in 2012 supported heavily by the geopolitical tensions between Iran and the West, with crude trading above the $108 level, not seen since May 2011, after a short bearish correction at the beginning of the week. The second ECB tender on Wednesday 1st March provided further support to the price of crude that smashed through the dizzy heights of $109, before returning back to $108.11, where it is currently trading. Today crude is falling victim to the bears with investors finding sanctuary in the US Dollar after Fed Chair Bernake offered a lot less dovish outlook for the US economy. From a technical point of view, the bears appear to regain the control with the RSI turning down both on the hourly and the daily chart, after touching overbought areas. The break below of the upward trendline at $108.31 on the hourly chart and the continuation of the US Dollar Index rally are favouring short positions on crude with target at the $106.60 support level. In the alternative scenario, a surge above $108.5 could open the door for the $109.71 area.
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