The price of crude oil is probing the psychologically significant resistance level at 70.00. A potential breakout would allow the uptrend to continue, whereas a reversal would likely imply the beginning of a new correction. Check out our broad analysis of the commodity to get a better sense of the underlying market sentiment.
At the highly anticipated 20th OPEC and Non-OPEC Ministerial Meeting, members downplayed the persisting global supply bottlenecks, focusing instead on the success of the Declaration of Conformity (DoC) of OPEC. This catalysed another upswing in the price of crude oil.
As can be seen on the 1D chart above, WTI is currently at a make-it-or-break-it junction. In addition to testing the 70.00 threshold, the price action would also probe the descending trend line (in red) for the third time. All of this is happening as the 50-day MA (in green) is converging with the psychological resistance.
That is why another reversal over the next several days seems highly probable. Even still, the underlying bullish sentiment remains quite solid. This is elucidated by the recent Bullish Engulfing from the 100-day MA (in blue).
On the one hand, a potential reversal from the descending trend line and the psychological resistance at 70.00 could be followed by a subsequent dropdown to the upper boundary of the last Accumulation range (at 66.00).
On the other, if the price manages to strengthen above 70.00, the uptrend would then stand a fairly decent chance of targeting the previous swing peak at 73.50. The major resistance level at 76.00 represents the next target for the uptrend.
It was noted that:
"The Meeting noted that, while the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened and OECD stocks continue to fall as the recovery accelerates. The Meeting welcomed the positive performance of Participating Countries in the Declaration of Cooperation (DoC). Overall conformity to the production adjustments was 110% in July."
A negligible drop in conformity was observed from the previous month when the reading was set at 113% per cent. Nevertheless, OPEC continues to demonstrate resilience as the global recovery continues to be patchy and uneven.