Light crude oil has started to trade higher after receiving bullish news from the oil market in regard to oil supply and it has also been finding support around the $70.00 level recently.
Oil prices have also taken a hit due to geopolitics and OPEC most recently, also the economic picture regarding the outlook for early 2023 currently does not look that great.
A record number of COVID-19 cases in China have also dented the supply. China has a veracious appetite for black gold and a weakening Chinese economy is generally very bad for oil prices.
Technically, Crude oil looks vulnerable to more downside. Any output increase could get oil prices closer to $65.00. This may in turn cause a cascade of longs to close if they feel OPEC is once again starting a trend in production increase.
According to the ActivTrader market sentiment tool, some 74 percent of traders are bearish towards crude oil, which suggests more upside trading in Light Crude oil prices.
Retail traders are typically on the wrong side of the trade and late to the price trend, so we should remain cautious while there is a large majority of retail traders are expecting more downside.
Light Crude Oil short-term Technical Analysis
The lower time frames according to Ichimoku analysis currently show that Crude oil has formed a large breakout above cloud resistance and is moving above its 200-period moving average on the four-hour time frame.
The recent moving above the key moving averages on the four-hour time frame is a bullish development. It should still be noted that the Ichimoku cloud breakout is very positive.
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Light Crude Oil medium-term Technical Analysis
The daily time frame shows that crude oil has a bearish bias while trading below cloud resistance, which is currently located around the $83.00 level.
It should be noted that crude has also fallen back under its 200-day moving average and not bounced. It is possible that a new bear trend is underway for oil prices in 2023.
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