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Oil prices have been correcting this week, with Crude oil moving back towards the $80.00 support area as oil traders await the November 4th OPEC meeting and the November 3rd FOMC decision.
Weaker than expected US GDP data and fears that oil supplies may start to increase due to a global slowdown and supply constraints are currently weighing on the sentiment towards commodities. Recent Amazon and Apple results did little for market sentiment also.
Fears over a new COVID-19 variant, and that global supply remained constrains will remain in place are other factors to watch could cause further oil price weakness below $80.00.
Despite these fundamental warning signs and the weekly price pullback, the charts surrounding Crude oil is still very bullish, and continue to be predicting further massive price gains.
A huge, inverted head and shoulders pattern formed this week, with the pattern predicting gains towards $90.00. The pattern has been playing out recently but has yet to meet its overall upside objective.
Looking at sentiment metrics, bullish sentiment amongst retail participants is particularly high, which is pretty worrying. The retail crows are often on the wrong side of the trade, so we do need to consider this.
According to the ActiveTrader market sentiment tool some 83 percent of traders are bullish towards crude oil, leaving plenty of scope for a further downward correction in Crude oil.
Crude Oil short-term Technical Analysis
The lower time frames currently show that crude oil is forming an extremely large broadening expanding wedge pattern. The pattern will be activated if crude oil rallies through the $80.00 to $85.60 price range.
According to the overall size of the bullish pattern crude oil rally by around $5.00 at a minimum once we see a breakout from this expanding wedge pattern.
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Crude Oil medium-term Technical Analysis
The daily time frame shows that a much larger inverted head and shoulders pattern has been invalidated, following the breakout above the October 2020 trading high.
This pattern has a massive price target above $90.00, however, it should be noted that it unclear whether Crude can actually reach $90.00. I think $90.00 is possible as indicated by the technical on the lower and higher time frame.
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