The direction of the market the rest of the session on Monday is likely to be determined by trader reaction to Friday’s close at $29.52.
U.S. West Texas Intermediate crude oil futures are trading sharply higher at the mid-session on Monday as production cuts and the easing of stay-at-home restrictions underpinned prices. The market is at a two-month high, one day ahead of the June futures contract expiration.
A month ago, the expiring May futures contract made history when it traded at minus $35.73. Today’s surge in the nearby June futures contract means spot prices are worth $68.44 more than they were a month ago. But I suspect the negative prices were all an aberration.
At 14:45 GMT, July WTI crude oil is trading $32.71, up $3.28 or +11.15%.
The main trend is down according to the daily swing chart, however, momentum is trending higher. The next upside target on the swing chart is the April 9 main top at $35.18. A trade through the last main bottom at $17.27 will signal a resumption of the downtrend.
The minor trend is up. This is controlling the upside momentum. A trade through the last minor bottom at $24.38 will change the minor trend to down. This will shift momentum back to down.
The short-term range is $35.18 to $17.27. Its retracement zone at $28.34 to $26.23 is support.
The main range is $54.86 to $17.27. Its retracement zone at $36.07 to $40.50 is the primary upside target.
Based on the early price action and the current price at $32.71, the direction of the market the rest of the session on Monday is likely to be determined by trader reaction to Friday’s close at $29.52.
A sustained move over $29.52 will signal the presence of buyers. If this continues to create upside momentum over the near-term then look for the really to eventually extend into $35.18 to $36.07.
A sustained move under $29.52 will indicate the presence of sellers. This will also put the market in a position to form a potentially bearish closing price reversal top. This could lead to a 2 to 3 day correction into $28.34 to $26.23.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.