In a 1-hour chart, Crude Oil, #CL, is trading below the SMA of 21 after having reached the highest level since November 2014 in the 76.92 area. From this point, oil prices are making a correction. Oil will probably find support at the 200 EMA zone.
The main driver behind the stunning rise of oil prices is the failed OPEC meeting held on Monday. The energy alliance terminated the meeting after failing to reach an agreement on production policy for the third time, due to objections from the United Arab Emirates and the feud between OPEC members. Such outcome fueled anxiety and pushed oil prices to overbought levels.
The United Arab Emirates opposed a consensus reached by the rest of the OPEC members to increase oil production by about 2 million barrels per day (bpd) from August until December 2021.
This policy can make crude oil reach levels of $ 80.00 - 85.00 per barrel in the short term as sparse global oil supply cannot meet growing energy demand. So, we can say that the upward trend has not yet ended and a new bullish wave could happen in the future.
According to the 1-hour chart, we note that crude is trading below +1/8 of murray which means that there could be a downward movement in the next few hours until we find relief from the overbought market conditions.
Our recommendation is to sell below 76.00, as the SMA of 21 is located there, with targets at the 75.00 8/8 zone and 74.11 EMA of 200. A probable upward rebound at this level may occur, suggesting an opportunity to buy.
Support and Resistance Levels for July 06 - 07, 2021
Resistance (3) 80.32
Resistance (2) 78.42
Resistance (1) 76.89
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Support (1) 75.41
Support (2) 74.20
Support (3) 72.42
