Can Crude break out of downtrend?
<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a> </strong></p>
<ul>
<li>Fed pivot last week sparked oil price recovery; extended by Red Sea disruptions</li>
<li>Crude now testing resistance at downward trendline</li>
<li>Elliot Wave: correction wave now underway</li>
<li>“Death cross” looms for crude oil</li>
<li>Traders set to react to US crude stockpiles data later today</li>
</ul>
<h3></h3>
<h3>Oil has been building on gains following the Fed’s policy pivot last week.</h3>
<p>More recently, crude prices continue to push higher following concerns about the <strong>disruptions in oil supplies by Houthi rebels .</strong></p>
<p>Shipping companies are reportedly diverting from the less expensive Red Sea route for longer and costlier supply routes, threatening to limit supplies for global consumers.</p>
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<h3><strong><em>If disruptions to oil supplies continue, stakeholders could expect to see Crude prices rally further. </em></strong></h3>
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<p> </p>
<h3>Also, <strong>US Crude oil inventories</strong> are due later today at <strong>3:30 pm GMT.</strong></h3>
<p>This data should shed more light on any imbalances in the supply and demand of the black gold.</p>
<p>Markets are currently expecting a drawdown of 2.3 million barrels.</p>
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<h3><em>However, a smaller-than-expected decline in US stockpiles, which implies weaker oil demand in the world’s largest economy, may prompt oil benchmarks to pare some of their recent gains.</em></h3>
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<p><img fetchpriority="high" decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/CrudeDaily%203.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="d93da4db-ccbc-43fa-910a-f750806bd900" data-src="/s3-static/users/user16/CrudeDaily%203.png" /></p>
<p> </p>
<p> </p>
<h3>From a technical perspective …</h3>
<p>Crude prices are currently above its<strong> 21-day SMA</strong> and <strong>finding resistance along the downward trend line </strong>drawn from <strong>October 20th, 2023.</strong></p>
<p>From an <strong>Elliot Wave</strong> perspective, the black gold has <strong>completed a 5-wave impulse decline</strong> and is seeing a <strong>correction (A-B-C) underway</strong>, starting from the end of wave 5 at <strong>$67.67. </strong></p>
<p>Furthermore, crude oil prices confirm the <strong>positive divergence,</strong> earlier highlighted by the <strong>Relative Strength Index </strong>on December 12th, 2023, as we see the <strong>RSI tether along the 50 mid-way line.</strong></p>
<p>Crude bulls will be looking to stay buoyed with strong moves above these levels.</p>
<ul>
<li><strong>$73.31:</strong>current trendline</li>
<li><strong>$73.57:</strong> the 50.0 Fibonacci level</li>
<li><strong>$74.96:</strong> the significant 61.8 golden mean Fibonacci level.</li>
</ul>
<p>The Fibonacci retracement level is drawn from the November 30th high of $79.15 to the December 13th low of $67.67.</p>
<p>If prices continue to rally above these levels, the <strong>200-day SMA </strong>is expected to act as the <strong>next near-term resistance. </strong></p>
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<h3>On the other hand, Crude bears may see a failure to break above the following levels as a signal for further price declines.</h3>
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<p> </p>
<p>Also, keep watch over the prospects of a <strong>“death cross”</strong> – the 50-day SMA is threatening to break below its 200-day counterpart.</p>
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<h3><strong><em>A “death cross” may well send a bearish signal to traders.</em></strong></h3>
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<p> </p>
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