– The bull relief zone held perfectly.
– Oil prices are up 5.50% for the month and 3.90% for the week.
– Even after very bearish OPEC production reports oil rallies 300 ticks.
– We remain short – mid-term bullish on the commodity
It´s pretty safe to say that we nailed the bull relief level. The reaction of the 41.30 level was as expected. Short term shorts took profit and mid-term bulls added to their long positions and price soared 300 ticks. Comments from the Saudi Oil Minister about a possible meeting between OPEC and non-OPEC producers to take action to stabilize the markets fueled this rally.
Oil made a new weekly high (44.14) almost hitting our first target at the 44.25 / 50 level. We continue buying dips and are looking for a retest of the 42.50 level to go long again. As stated before, technically speaking we haven´t hit our first long targets yet so we believe that a small retracement to the 43.30 level during the European session could ignite a short term rally to those targets.
We are closely monitoring price and if we don´t get that deep 50% retracement we will look for a break of the 44.50 level for a run at our second targets at 46.80.
Let´s have a look at this Fibonacci cycle too. Price rallied from the August lows then bounced from the 50% stopping at the 113% extension. If the cycle continues we would expect a bounce off the pivotal 42.50 level which is also the 50% of the first leg of the cycle.
