Current trend

During the morning session, WTI Crude Oil prices are developing the “bullish” momentum formed at the beginning of the week, when the asset retreated from the lows since the beginning of October. They are testing 71.50 for a breakout, while traders are assessing the results of the meeting of the People’s Bank of China, at which the interest rate was reduced by 25 basis points to 3.10%, below the forecast of 3.15%.

Additional support for the quotes is provided by geopolitical tensions in the Middle East. Israel has still not responded to the missile attack by Iran in early October, continuing to conduct several operations in various areas of the region. However, experts still expect a reaction to follow, leading to an escalation of the situation. Analysts consider the blocking of the Strait of Hormuz by Iran, which plays a vital role in oil transportation, as the most negative scenario.

Yesterday’s American Petroleum Institute (API) report put moderate pressure on the quotes. For the week of October 18, oil commercial reserves increased from –1.580M barrels to 1.643M barrels against forecasts of 0.700M barrels. Today, the publication of data from the Energy Information Administration of the US Department of Energy (EIA) will follow. According to preliminary estimates, the indicator will be adjusted from –2.191M barrels to 0.700M barrels.

Support and resistance

On the daily chart, Bollinger bands are hesitantly declining: the price range is narrowing, remaining quite spacious for activity in the market. The MACD indicator is reversing towards growth, forming a buy signal (the histogram is trying to consolidate above the signal line). Stochastic is quickly approaching the highs, indicating that the instrument may become overbought in the ultra-short term.

Resistance levels: 71.60, 72.17, 73.00, 74.00.

Support levels: 71.00, 70.00, 69.06, 68.15.

Trading tips

Long positions may be opened after a breakout of 71.60, with the target at 73.00. Stop loss — 71.00. Implementation period: 1–2 days.

Short positions may be opened after a rebound from 71.60 and a breakdown of 71.00 with the target at 70.00. Stop loss — 71.60.