BP Oil Stock Bullish Formation and Its Consequences / Commodities / Oil Companies

The combination of supports and acandlestick formation encouraged the bulls to fight.

How high could stock go?

Last week turned out to be a breakthroughfor the bulls. They managed to maintain important support, which attractedbuyers to the trading floor and resulted in further positive technical changes.How high can the bulls climb in the following days? You will find the answer tothis question in the article below. Have a nice read.

TheUnderpinnings of BP's Recent Surge

In theprevious comment on BP published on Jan. 17 you could read thefollowing:

(…)when we take a closer look at the chart (…), we can see that the space forfurther declines may be limited as not far from current levels, the bulls mayfind support.

(…)quite close to yesterday’s low, there is a red dashed declining line, which isa lower border of the red declining channel, which could encourage the buyersto trigger a rebound in the near future.

Thisscenario is also reinforced by the fact that the bears realized thepro-declining scenario described in the last article on BP, which suggests thatthey may be satisfied with the gains they have made and refrain from furtherstrong attacks.

Additionally,the current position of the indicators suggests that higher prices may be justaround the corner as the CCI remains in its oversold area while the StochasticOscillator generated a buy signal. At this point, it is worth noting that suchlow readings of the indicators we saw at the beginning of November.

(…)such low readings preceded the reversal, which suggests that similar priceaction may be just around the corner. However, before this happens, the bullswill have to show strength and prove that they are ready to fight for higherlevels.

From today’s point of view, we see thatthe situation developed in line with the above scenario, and the price reversedand rebounded in the following days.

As you see on the daily chart, althoughthe bears extended losses in the previous week, the combination of the lowerborder of the red declining channel (marked with dashed lines) and the supportarea based on the late-Jun. and early-Jul. lows (marked with green horizontaldashed lines) encouraged the bulls to fight.

They started a consolidation in thissupport area, which allowed them to gather enough strength to attack the higherlevels. As a result, the price broke above the upper line of the formation andthen jumped even higher, creating a green supportive gap (34.25-34.47) onJan.24.

Thanks to this price action, an island reversal candlestick pattern (marked with a green ellipse on the chart) appeared on the chart, giving thebulls one more important reason to act. We didn't have to wait long for theeffects because the next session opened with another green pro-growth price gap(34.56-34.85) and the stocks finished the day above 35.

When we take a look at the chart below,we can also notice that the recent upward move closed not only the red gap fromJan.17, but also the red gap created on Jan 16. and pushed the price above the50% Fibonacci retracement based on the Jan. decline.



What’snext?

Taking into account all theabove-mentioned bullish factors and combining it with the buy signals generatedby the indicators, it seems that further improvement is very likely.

How high could stocks go?

In my opinion, the first upside targetfor the bulls would be around 35.34-35.51, where the nearest resistance zone(created by the lower border of the big red gap [35.37-36.03] from Jan.8, the61.8% Fibonacci retracement [based on Jan. decline] and reinforced by thebearish engulfing pattern from Jan.9) is.

If this strong area will not discouragethe bulls from fighting and it will not activate the bears, we could see anattack on the upper border of the mentioned gap, which is slightly below thenext very strong resistance area created by two red gaps: from Oct.31, 2023,and Dec.1, 2023, which was strong enough to stop the buyers several times inthe previous months.

At this point, it is worth noting thatcurrently it is also reinforced by the bearish dark cloud candlestick patternformed on Jan.4 and the 38.2% Fibonacci retracement (based on the entireOct.-Jan. downward move), which makes it akey short-term resistance, the breach of which may open the way to higherlevels. However, in my opinion, as long as it remains in the cards, a reversalin this area should be taken into account.

Summingup, the combination of supports and a pro-growthcandlestick formation encouraged the bulls to fight for higher prices, whichresulted in a quite sharp rebound and closing pro-bearish gaps and forcing the50% Fibonacci retracement, which opened the way to the north. Therefore,further improvement and attack on the next resistances is very likely in thecoming days.

If you’d like to know what the currenttechnical picture of crude oil is or to find out what arguments the bulls haveor what allies do the bears have, I encourage you to subscribe to Oil TradingAlerts, where you’ll find the answers to these (and many other)questions.

Have a wonderful weekend and see you onMonday.

Thank you.

AnnaRadomski

Founder, Editor-in-chief

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