Crude oil prices continue to consolidate below this week’s high of $57.47 as the price has struggled to overtake this level since the start of the week.
A break to the weekly high at $57.47 could open the door for a test of the September 24 high at $58.49. However, following the sharp price rise from last week’s low of $53.71, the risk-reward ratio for new long positions in Crude oil is unfavorable.
The rationale is simple; crude oil prices could easily give up 50% of last week’s gains, which means that buying on a break to $57.47, will offer a risk of 1.94 dollars per contract, while the upside is 1.02 dollar per contract. The unfavorable risk-reward ratio and the relative strength indicator (RSI 14) being near overbought, suggests that the price might decline in the days ahead on profit-taking.
As the overall trend is upwards above last week’s low of $53.71, I suspect that traders will consider bullish positions between the 50% correction level at $55.57, and last week’s low.
If the price indeed turns higher from the interval above, I suspect traders might lift the price to this week’s high at $57.47.