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Technical analysis of crude oil – what has happened?

The influence of fundamentals on crude oil cause high volatility in the markets and left several areas as subjects of interest.

Oil still rising

Oil is on a rise for the 4th month in a row.  Tightening the economy could bring lower demand of oil products in the US and fear of recession trigger the volatility as well. China’s Covid situation does not bring more light into the markets and the further steps are closely watched. Fundamentals, which influence black commodity sparked huge volatility on the market, but the price has been rising overall.

Market profile

Daily market profile shows the highest volume from previous day. The area pointed out by market profile is in range 104.81$ – 106.85$ (blue rectangle). Moreover, point of control (the highest traded volume of that day) is at 106.50$. 

30 minutes chart of CL (crude oil futures), Daily Market Profile. Source: Author's analysis

30 minutes chart of CL (crude oil futures), Daily Market Profile. Source: Author’s analysis

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Monthly VWAP

Volume weighted average price on monthly basis shows possible support around 105$ (blue ellipse) level. This level lays inside of the area from previous chart. In addition, first support is at 108.56$, which is the developing 1st standard deviation in monthly VWAP (orange line). Resistance is at 111.73$ level. 

30 minutes chart of CL. Monthly VWAP. Source: Author's analysis

30 minutes chart of CL, Monthly VWAP. Source: Author’s analysis

Price action

The last chart represents price action with highlighted 123 gaps (green and red areas). The area of our interest represents green 123 gap in range 104.86$ – 105.49$. This could be possible support for oil in the case of its price decline. On the other hand, resistance area defined by another 123 gap is in range 110.75$ – 111.16$. 

30 minutes chart of CL, Price action - 123 gaps. Source: Author's analysis

30 minutes chart of CL, Price action – 123 gaps. Source: Author’s analysis

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Possible support area

There are not many strong resistances, which could stop the up-move. On the other hand, this chart brings quite interesting support area. This area is defined by daily market profile and it includes all the highlighted levels from the article. 

There is no intention to suggest that the price of crude oil will go down because of this support. The point is to demonstrate, that IF the price goes down, the area 104.81$ – 106.85$ could be the subject of the interest. 

Tomas is a professional trader and money manager on foreign exchange market from 2014. His main domain are commodities. Experiences gained due this period are transformed to consul...

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