Oil to Trade in $48-$50 Range, Move to $60: Technical Analysis
Source: Bloomberg, Anthony DiPaola (4/19/09)
"Oil is still above the 11-week moving average and it's consolidating."
"Oil is still above the 11-week moving average and it's consolidating," Raed Diab, a technical analyst at Global Investment House, said in a telephone interview April 16. "Fundamentals are playing a role and that's why it's trading in a tight range."
Crude stayed above the 11-week moving average of $48.75 last week, indicating investors may continue buying the commodity. The 11-week moving average represents a medium-term indicator of price levels and investor behavior.
The next level of resistance is $54.60 a barrel, near this year's intraday high set at the end of March, Diab said. Breaking that resistance could mean oil investors may target prices as high as $59 or $60 a barrel, representing levels last reached Nov. 14, Diab said.
Prices at $59.51 a barrel would be a 23.6% recovery in the five-month slide in crude, reaching a threshold from the ratio between numbers in the Fibonacci sequence. The ratio, sometimes known as the golden mean, is used to find points of support or resistance as prices retrace rallies or declines between previous high and lows.
"There is strong support at $47.30," the analyst said. The next support levels are $43.60 a barrel and $42.50, he said, adding that he sees oil trading in a range between $48 and $50 a barrel.