Oil price bounced to $48.85 per barrel on Wednesday and hit the highest level since last Friday, after spiking to three-month low at $47.08 on Tuesday.
Rally was backed by surprise fall in US inventories in API report, released on Tuesday.
Double-Doji in past two days, with Tuesday’s candle with very long tail, signal strong indecision and downside rejection after the price fell below $50 per barrel last week.
Investors are eyeing today’s release of EIA crude inventories, which is showing forecast for 3.3 million barrels build in the week behind us, well below previous week’s shock on 8.2 million barrels build.
Two long-tailed candles are underpinning, however, the price needs clear break above initial barrier at $48.71 (200SMA) to generate stronger signal for retest of breakpoint at $50.00 (daily cloud base / near Fibo 38.2% of $55.01/$47.08 fall).
Initial reversal signal is generating as daily RSI/slow stochastic are emerging from oversold territory.
Alternative scenario sees repeated close below 200SMA as signal of extended consolidation before broader bears resume.
Res: 48.71; 50.00; 50.70; 51.05
Sup: 48.31; 47.90; 47.08; 45.27
