WTI crude oil seems to be off to a positive start to 2025, but it looks like a correction from its rally is due.
Can it find support at these inflection points?
WTI Crude Oil (USOIL) 4-hour Chart by TradingView
Before 2024 came to a close, crude oil busted through its near-term resistance around the $71 per barrel mark then proceeded to zoom up close to the $75 per barrel area when markets reopened this year.
The OPEC+ decision to delay its production hike, along with more stimulus measures from China, appear keeping the commodity strongly supported so far.
Are more buyers waiting to catch potential pullbacks?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on crude oil and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Price is retreating from its latest highs and could be in for a dip to nearby Fibonacci retracement levels seen on the 4-hour time frame.
The 38.2% Fib lines up with the pivot point level ($72.75 per barrel) while the 61.8% retracement is closer to S1 ($71.35 per barrel) and an ascending trend line connecting the lows since early December.
At the same time, the 100 SMA is above the 200 SMA to suggest that the rally is more likely to resume than to reverse, and the gap between the indicators is widening to reflect increased bullish pressure.
Watch out for candlestick patterns suggesting a potential bounce around any of the Fibs, as this could be followed by a move back up to the swing high or even up to R1 ($75.49 per barrel) and beyond.
On the other hand, long red candles closing below the area of interest around $71 per barrel could suggest that a reversal from the uptrend is in the works. In this case, look out for a move down to the next potential floor at S2 ($68.69 per barrel) then S3 ($67.21 per barrel).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
