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Rising Inventories and Resistance zone pose a threat to Crude Oil


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Declining dollar value and decreasing inventories caused crude oil prices to trend higher from 2740 to 3475 over the period of 5 months (June Oct). Crude oil attracted bets of Institutions and Hedge funds with stellar performance. But in coming days, intermediateuptrendin crude Oil will gettestedby rising inventories and potential resistance zone at 3500.

Uptrend Faces potential resistance zone

Image Courtesy:Tradingcoach

The U.S. crude inventories have increased as per the last inventory report. The American Petroleum Institute has released the data on last Wednesday which exhibited that oil stockpiles got increased by 3.1 million barrels last week. The crude oil supplies in Oklahoma, biggest oil storage hub in the U.S. went up by 1.22 million barrels which will mark seventh straight increase. A consistent rise in Oil storage and inventories can cap theuptrendwe are witnessing in Crude Oil. By looking at the recent Price action on lower time frame (around 3400) its obvious to spot market participants getting cautious and liquidating their positions.

Another technical hurdle is potential resistance zone at 3500. Since 2015, Oil prices tried breaching the level multiple times and couldnt make through it. Psychologically breaking the resistance zone is a challenging task for bulls. It impacts the integrity of the trend; prices should clearly break andretestthe zone to trend higher, failure to do so can change the market sentiment. We need to see how price behaves at resistance zone and whether bulls will be aggressive this time or whether it will turn out just like previous attempts.

Will further increase in inventories cap theUptrendin Oil Prices? Can Market breach 3500 this time?Watch the price action for answers and trading setup. In Coming days Crude Oil will be an interesting script to trade. Market may offer potential swing trading and position trading opportunities. Keep it in your watch list.

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Balaji is a Trader, Investor and Self published Blogger. He wrties frequently on his website www.tradingcoach.co.in Balaji is specialised in applying systematic Price action trading strategies and Global Macro techniques on financial markets such as Equities, Dervatives, Futures and Bonds. He is well versed on both International and domestic markets and has trading experience of more than 8 years.  
 
As a trader his core purpose is to generate superior risk adjusted returns on consistent basis by applying Flexible risk managment combined with a Postive expectancy of Price action strategies. He writes passionately about Technical analysis, Trading strategies, Price Action setups and Global macro events. 
 
Apart from trading and Blogging, Balaji also mentors aspiring traders, Investors on becoming succesful in highly competative financial markets. He offers permium trading course on which he covers Price action trading methods, Institutional trading strategies and Macro trading.

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