Oil Tests Previous Highs, Outlook Remains Bullish

The price of oil dropped considerably on Thursday, but it was only a correction of the previous steep bullish move. The price rose by 0.30% during the London session on Friday, hovering around the 75.00 USD mark.

The price is now testing July's highs of around 74.30 USD, where the first major support is located. If oil stays above, the short-term outlook may remain bullish. The next buying zone mat lay at May's highs at 72.80 USD and subsequently, at the bullish trend line, which lies near 71.80 USD. As long as oil trades above these supports, the short and medium-term outlooks seem bullish.

The resistance to Friday's trading might be at around the 75 USD mark and if broken, oil could accelerate higher towards the current cycle highs of 77.00 USD.

However, the daily RSI is approaching overbought conditions and remains slightly below the 70 zone, which points to the possibility that a correction could occur soon. This could bring about another market opportunity and traders might jump in to the dip. Volatility might be expected to be higher today due to the US labour market data release.

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