Oil Rebounds After Hitting Key Support, but Long-Term Outlook Remains Bearish
22 August 2024
Oil has been in a sharp decline since August 12th, marking another leg down in its bearish trend. This drop was triggered by a false bullish breakout above the yellow resistance level, which generated a strong sell signal and led to a significant price decrease. However, recently, we've seen a reversal—a bullish bounce. This bounce can be attributed to a classic technical scenario where the price hit a strong horizontal support level, corresponding to the lows from August 5th. This support has provided a good opportunity for profit-taking, leading to the current upward movement.
In the long term, the sentiment for oil remains bearish, but in the short term, the outlook has turned positive with this bounce. The potential targets for this upward movement are the blue downtrend line or the yellow horizontal resistance level. As long as the price stays above the orange horizontal support, the short-term sentiment remains positive, even though the broader trend is still negative.