Forex Trading News

Crude Oil Testing Multi-Week Resistance on Positive Chinese Outlook

Oil Price, Chart, and Analysis

  • Chinese growth boosts demand for oil.
  • The technical outlook for oil also looks positive.

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China yesterday reported better-than-expected December growth figures, fueling thoughts that one of the world’s largest growth engines may be moving into a higher gear. While the data was still sharply lower than the prior quarters, GDP, retail sales, and industrial production all topped analysts’ expectations by a decent margin. The country’s reversal of its zero covid policy is driving thoughts that economic activity will increase across the board as supply chain disruptions ease.

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The technical outlook for oil looks positive with the rally from $72/bbl. level producing a string of higher lows and higher highs. Oil is also back above both the 20- and 50-day moving averages for the first time in two months. The CCI indicator is flashing an overbought signal and if the market is to push further ahead this needs to move back lower. There is reasonable short-term support down to $77.70/bbl. and if this holds then the current resistance around $81.50/bbl. is likely to be broken.

US Crude Oil Daily Price Chart – January 18, 2023

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US Crude Oil:Retail trader data shows 57.27% of traders are net-long with the ratio of traders long to short at 1.34 to 1.The number of traders net-long is 2.66% lower than yesterday and 24.68% lower from last week, while the number of traders net-short is 11.36% higher than yesterday and 71.20% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsOil– US Crude prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil – US Crude price trend may soon reverse higher despite the fact traders remain net-long.

What is your view on the Oil – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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