Recession fears and weakening demand worldwide have pushed the crude prices down as the market has been falling from $121.00 in early June to $86.00 in mid-August in a pure downtrend. However, the downtrend has lost momentum after several attempts failed to overcome the $86.00 support.
Crude on the four-hour chart is set to clear the one-week top at $91.60 on Tuesday after breaking the down trendline to the upside. The recent upside breakout now gets the 200 EMA under threat, which lines up with the major top at $94.25. Yet lower tops and lower bottoms convey the general downtrend is still in play.
If buyers succeed in dominating the market, a decisive break above the 200 exponential moving average would confirm the completion of a double-bottom pattern, hinting at a bullish reversal. In that case, the immediate resistance may confront the crude at $97.00.
Alternatively, should sellers defend Monday’s top at $91.60 at the end of the day, we can expect a retest of the broken trendline.
Short-term momentum oscillators favour the upside bias continuing. RSI is trending upward in the buying region, momentum is moving above the 100-threshold in buying zone, and MACD bars are growing taller, implying the difference between the two averages is increasing.
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