After steadily moving up since the middle of last year, the price of crude oil succumbed to profit-taking in the last two weeks due to it becoming very overbought.
Crude oil has certainly gone through some of the most volatile market conditions over the Covid-19 period. The price of the much-converted asset fell as low as zero at a stage, due to a number of factors, but has bounced back to be performing as a usual market again.
The current market conditions see oil looking to head to $60 and above after it found support at $58. There are a few reasons for this, both market-related and geopolitically that could see the oil head to $73 and above, expects PrimeXBT analyst Kim Chua.
After steadily moving up since the middle of last year, the price of crude oil succumbed to profit-taking in the last two weeks due to it becoming very overbought. However, the price is rebounding off its support at $58 as anticipated, with the reopening of economies and the Saudi production cut key factors that will continue to drive the price up.
Last week, we saw a new reason for the oil price to remain supported – a geopolitical situation in North Korea. North Korea has fired two missiles last week which is unnerving its neighbors. Experts are warning that this action is a direct challenge to the new Biden administration in the USA.
Should tensions arise again between the US and North Korea, oil prices could rocket higher. The technical picture is a bullish one, with the upward trending channel pointing towards an interim target price of $73.
The RSI is no longer overbought at 55 and is pointing up, with an inverted head and shoulders formation that will inevitably send the RSI going up further towards 70 and beyond. Hence, the technical picture also points to an increase in oil price in the coming days, concluded Chua.
Kim Chua is an institutional trading specialist with a track record of success that extends across leading banks including Deutsche Bank, China Merchants Bank, and more. Chua later launched a hedge fund that consistently achieved triple-digit returns for seven years. Chua is also an educator at heart who developed her own proprietary trading curriculum to pass her knowledge down to a new generation of analysts. Kim Chua actively follows both traditional and cryptocurrency markets closely and is eager to find future investment and trading opportunities as the two vastly different asset classes begin to converge.