Oil prices reversed earlier losses after reports that Saudi Arabia informed OPEC officials it wants to continue output cuts for an additional six months. Last week, oil surged toward a one-month high following the United States missile strike against a Syrian government airbase. The strikes represented the first targeted US military action against President Bashar al-Ashad. US West Texas Intermediate (WTI) crude rallied to an intra-day high of $53.57.
GOP US Senators John McCain and Lindsay Graham are urging President Trump to increase military involvement in Syria that includes grounding Syrian air force and establishing safe havens inside Syria to protect Syrians.
Price action on the US oil daily chart shows that the high made from the bearish ABCD pattern on Jan 3rd remains key resistance. Currently price is still trending above all three key SMA(s). If the bullish move accelerates, key resistance may come from the $57.21 to $59.99 region, which comes from both the 127.2% and 161.8% Fibonacci expansion levels of the last major leg down. The medium term outlook could see oil maintain $47.50 to $60.00 trading range. If we see bullish momentum recapture the psychological $60.00 level, further resistance may target the $65.50 level.
If the downward pressure returns, major support comes from the 200-day SMA, which currently trades at the $48.84 level.
The trade: Buy US oil at $53.25, with a stop loss at $52.25 and take profit at $56.25 The risk/reward ratio is 1:3