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Crude Oil Uptrend will get tested by Inventories and Resistance zone

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, intermediate uptrend in crude Oil will get tested by rising inventories and potential resistance zone at 3500.

Keep an eye on the Price action and resistance zone in Crude Oil

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 the uptrend we are witnessing in Crude Oil. By looking at the recent Price action on lower time frame (around 3400) it’s 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 couldn’t 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 and retest the 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 the Uptrend in 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 positional trading opportunities. Keep it in your watch list.

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