Crude Oil Price Update – Breaking Out Above 200-Day Moving Average at $60.76

U.S. West Texas Intermediate crude oil futures closed sharply higher on Monday. Prices were underpinned early by reports of tightening supply, but it was increased appetite for risk on the back of stronger-than-expected manufacturing data in China and the United States that launched most of the rally. A breakout over the 200-Day Moving Average also contributed to the rally since this brought in aggressive buying from the commodity funds.

At 03:00 GMT, May WTI crude oil is trading $61.77, up $0.18 or +0.29%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Buyers extended the markets gains on Monday when they drove prices through the 200-Day Moving Average at $60.76. This level is support along with the previous main top at $60.39. The main trend will change to down on a move through $58.17.

The market is also trading inside a long-term 50% to 61.8 retracement zone. The 50% level at $59.63 is new support. The 61.8% level is the next major upside target.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the May WTI crude oil chart the rest of the session is likely to be determined by trader reaction to yesterday’s close at $61.59.

Bullish Scenario

With the main trend up and momentum trending higher, buyers are going to have to continue to come in to drive the market into the next upside target at $63.45. There is no resistance until this price so if we are going to see selling pressure, it will come from a bearish chart pattern.

Bearish Scenario

After Tuesday’s early higher-high, a move through yesterday’s close at $61.59 will be the first sign of weakness. If this occurs then look for a potentially bearish closing price reversal top to develop. The first target is the 200-Day Moving Average at $60.76, followed by the last main top at $60.39.

A closing price reversal top won’t change the main trend to down, but it could trigger the start of a 2 to 3 day counter-trend break.