US oil futures have rallied sharply from the April low of 35.24 to reach a high of 50.19 on May 26.
In the bigger picture the trend is bullish and the crossing of the 50-day moving average above the 200-day moving average supports this view. However, the short term outlook is neutral since prices have failed to break above the 50.19 high and the market has been consolidating gains in the past three weeks. RSI is in bullish territory but close to overbought levels, which indicates consolidation or even a pull back is due.
Downside moves would find support at 46.64, which is the 23.6 Fibonacci retracement of the 35.24 to 50.19 upleg. Below this, support lies at the 38.2 retracement at 44.48.
The 50% Fibonacci level at 42.70 is an important support level. If prices fall below it, this would shift the bias to a more bearish one.
Alternatively a daily close above the key $50 level would propel prices higher for a resumption of the uptrend.
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