Crude Oil Price Update – Bouncing Off Key Retracement Zone at $59.58 – $57.64

U.S. West Texas Intermediate crude oil futures are inching higher early Friday in a technical bounce following yesterday’s steep sell-off. The selling pressure was driven by a stronger U.S. Dollar, which reduced foreign demand, a rise in crude oil stockpiles, and renewed concerns over the demand recovery in Europe.

At 05:05 GMT, May WTI crude oil futures are trading $60.39, up $0.33 or +0.55%.

Sellers were mostly motivated as a new wave of COVID-19 infections washed across Europe, spurring new lockdowns and dampening hopes for a recovery in demand for fuels anytime soon.

Several large European countries have reimposed lockdowns as new infections increase again, while vaccination programs slow because of concerns about side effects of the AstraZeneca vaccine, which was being widely distributed in Europe.

 

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out $63.10.

A trade through $58.28 will signal a resumption of the downtrend, while a move through the main bottom at $57.06 will reaffirm the downtrend. The main trend changes to up on a move through $66.44.

The main range is $51.37 to $67.79. Its retracement zone at $59.58 to $57.64 was the primary downside target. The market is currently trading on the strong side of this zone after hitting a low at $58.28 inside the zone on Thursday.

The minor range is $66.44 to $58.28. Its 50% level at $62.36 is the first upside target.

The short-term range is $67.79 to $58.28. Its retracement zone at $63.04 to $64.16 is the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the May WTI crude oil market on Friday is likely to be determined by trader reaction to the main 50% level at $59.58.

Bullish Scenario

A sustained move over $59.58 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a potential surge into the minor 50% level at $62.36, followed by the retracement zone at $63.04 to $64.16.

Bearish Scenario

A sustained move under $59.58 will signal the presence of sellers. The first downside targets are $58.28 to $57.64. Crossing to the weak side of $57.64 could trigger another acceleration to the downside with the next major target coming in at $51.37.

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