OIL: Takes A Tumble Just As Expected
As mentioned at the start of the week, WTI has been consolidating in a range of 350 pips between $63.50 and $60.00. The 4-hour time frame shows this especially well, with price throwing wicks both to the up and downside but no daily closures above or below this region.
At the time of writing, the price seems to be coming back to test our support once again at $60.00 (currently trading at $60.42). If this support was to hold then we would look to play the range back up to our resistance level at $60.00-$63.50.
However, when looking for further confluences to confirm our trade idea we must take a look at USDCAD as the correlation between the commodity and currency pair is very high. Looking at the currency pair we can see that there is further room to the upside, 1.35 is our next resistance level. If we were to reach those highs then potentially we could look to break our support level seen at $60.50, confirming further downside for the commodity.
We know that fundamentally speaking Oil production levels will not be altered until OPECS next meeting which is next month, so we could anticipate further consolidation for both the currency and commodity.
A daily closure above or below our highlighted region and this would signify and shift in our bias and a new trend underway. Caution will be needed around these levels as there could be an unexpected turn so be vigilant....