WTI oil trades lower in mid-European session after hitting new two-month high at $66.53 in early Monday’s trading.
Fresh extension of Friday’s strong rally showed signs of stall just ticks ahead of 25 Jan recovery high at $66.64 (the highest since Nov 2014), signaling that bulls may enter consolidative / corrective phase before resuming.
The notion is supported by overbought daily slow stochastic which is attempting to emerge from overbought territory and generate firmer bearish signal.
Initial support lies at $65.01 (Fibo 23.6% of $60.11/$66.53 rally) which should ideally hold, however, deeper dips towards strong supports at $64.22/08 (26 Feb former high / Fibo 38.2%) cannot be ruled out.
Caution on break below $64.22/08 pivots, which could signal deeper correction and sideline immediate bulls.
Overall bullish structure favors further upside, with firm break above $66.64 required to confirm an end of $66.64/$58.06 corrective phase and signal continuation of broader recovery from $26.04 (2016 low).
Concerns about global trade war weighs on oil bulls, along with rising US oil production after the latest data showed the number of rigs drilling for oil rose to the highest in three years.
On the other side, long bullish weekly candle of last week, underpins, as oil price is on track for bullish monthly close which could further boost bulls on formation of monthly bullish engulfing.
Res: 65.98, 66.53, 66.64, 67.00
Sup: 65.26, 65.01, 64.22, 64.08
