Crude oil technical analysis shows that the price of crude oil is starting to appear overstretched to the upside.
Traders may look for weakness around current levels as the momentum indicator shows that negative price divergence continues to build on the lower time frames.
Crude Oil medium-term price trend
Crude oil price analysis over the medium term shows that a bullish technical shift has recently occurred.
Crude oil is trading above its 200-day moving average for the first time since September 17, following the recent positive news surrounding the first phase of the Sino-US trade deal.
A price floor was established in crude oil during early October, just above the $56.00 level, with the price of crude oil currently in the midst of a bullish correction.
Traders appear to be searching for new price discovery above the $65.00 level since the breakout above crude oil’s 200-day moving average.
Crude oil faces formidable upcoming technical resistance from the $68.20 and $70.00 levels if bulls continue to cement gains above the $65.00 level.
Given the bearish global macro view and recent multi-day advance, crude oil would appear overstretched around the current levels.
Crude oil short-term price trend
Crude oil technical analysis highlights that a bullish bias is in place over the short term while price trades above the $62.10 level.
The lower timeframes are currently more bearish than the higher timeframes due to the presence of a head-and-shoulders pattern and negative price divergence seen in the momentum indicator.
A crude oil technical analysis chart on the four-hour timeframe shows that a head-and-shoulders is in play. The pattern is valid while the price trades under $68.00.
Traders should also be aware that the momentum indicator is showing significant amounts of negative divergence with the price heading higher while the indicator trends lower.
With this in mind, crude oil prices could correct back to the $62.00 to $60.00 support areas over the short term.
Crude oil technical summary
Crude oil technical analysis shows that a bullish shift price has occurred. However, it may prove short lived.
Negative momentum divergence across the lower time frames may be signalling a reversal in crude oil prices.
