WTI oil opened with nearly 6% gap higher on Monday after the OPEC+ group shook markets by surprise decision to further cut production by 1.6 million barrels per day, over the weekend.
The cartel initially decided to cut output by 2 million barrels per day until December and the latest move signals that Saudi Arabia and its partners want to prevent further sell-off, facing criticism from the US administration, which shows divergence in targets of two countries.
Monday’s jump spiked above psychological $80 level for the first time in almost one month, after the price dipped to the lowest since Aug 2021 during March, contributing to formation of reversal pattern and bear-trap under 200WMA on weekly chart.
Fresh bullish acceleration has fully reversed $80.99/$64.34 bear-leg and pierced pivotal barriers at $80.59/99 (former double-top of Feb 13/Mar 7) break of which would add to bullish signals.
Daily studies turned to full bullish configuration, but overbought conditions suggest that bulls may take a breather for consolidation, before resuming advance.
Dips are expected to offer better opportunities to enter fresh long positions and should find firm ground above $77.06 (broken Fibo 76.4% of $80.99/$64.34 / 100DMA) to keep larger bulls intact.
Close above $80 pivot is seen as initial requirement, with extension and close above $80.99 to confirm bullish stance and expose targets at $82.64 /$84.44 (2023 high of Jan 18) and $84.00 (200DMA).
Res: 80.59; 80.99; 82.64; 84.44.
Sup: 78.98; 77.52; 77.06; 76.11.
