On Friday, the price of crude oil rose to $103.77 per barrel and reached above the August 22 low on an intraday basis. However, soft U.S. data led to profit taking by fueling concerns that U.S. recovery still faces potholes and may demand less fuel and energy going forward. Additionally, the price of oil fell as tensions eased between the United States and Iran after the Obama-Rouhani talks. 

On Friday, we saw another upward move, which pushed the price of crude oil above the previously-broken rising medium-term support line. However, the improvement was only temporary and after an intraday high at $103.77, light crude slipped below this medium-term support line once again. In this way, the price dropped to $102.78 and crude oil lost 0.10% at the end of the day. Additionally, it closed lower for a third week and has lost nearly 5% in September so far.

Despite these circumstances, the buyers have managed to hold the monthly low, which has some bullish implications for the very short-term picture.

On the other hand, we saw two attempts to move above the previously-broken rising medium-term support line, but they both failed and crude oil closed the whole week below it. Please note that the breakdown was confirmed, which has bearish implications for the very short-term picture. Additionally, the breakdown below the 50-day moving average and the short-term rising support line was also confirmed.

The nearest strong support is the zone based on the August low and the 38.2% Fibonacci retracement level. If it is broken, the next support zone will be slightly below $100 per barrel, where the 50% Fibonacci retracement level intersects with the June high. 

Summing up, although there has been a downward move in the recent days, which took the price of light crude to a new monthly low, technically, the situation hasn’t changed much. As long as crude oil remains above the previously mentioned strong support zone, the uptrend is not threatened. 

Very short-term outlook: bearish
Short-term outlook: mixed
MT outlook: mixed
LT outlook: bullish

Trading position (short-term): we do not suggest opening short positions at the moment. Although the situation is still bearish on a very short-term basis, the trade looks risky because of the strong support zone. We do not suggest opening long positions either, because there has been no breakout above the medium-term support/resistance line and the price of crude oil may test the strength of the previously mentioned strong support.

Thank you,
Nadia Simmons