Based on the current price at $62.78 and the earlier price action, the direction of the crude oil market later in the session is likely to be determined by trader reaction to the Fibonacci levels at $62.91 to $63.15.
April West Texas Intermediate crude oil futures reversed early losses on Thursday after government data showed an unexpected decline in U.S. crude stockpiles and the dollar weakened.
According to the U.S. Energy Information Administration, U.S. commercial crude inventories fell by 1.6 million barrels in the week to February 16. Traders were looking for a build of 1.3 million barrels. Additionally, crude stocks at the futures hub in Cushing, Oklahoma, fell by 2.7 million barrels.
The main trend is up according to the daily swing chart. The trend turned up on a trade though $62.65 earlier today. The new swing bottom is $60.75. A trade through this level will change the main trend to down.
The main range is $55.96 to $66.39. Its retracement zone at $61.18 to $59.94 provided support earlier in the session. Holding above this zone will help give the market an upside bias.
The intermediate range is $66.39 to $57.90. Its retracement zone at $63.15 to $62.15 is currently being tested.
The short-term range is $66.00 to $57.90. Its retracement zone is $61.95 to $62.91.
Combining the intermediate and short-term resistance zones forms a resistance cluster at $62.91 to $63.15. The support cluster is $62.15 to $61.95.
Based on the current price at $62.78 and the earlier price action, the direction of the crude oil market later in the session is likely to be determined by trader reaction to the Fibonacci levels at $62.91 to $63.15.
A sustained move under $62.91 will indicate the presence of sellers. This could drive the market back into the 50% levels at $62.15 to $61.95. Since the main trend is up, buyers may come in on a test of this area. If $61.95 fails as support then we could see an acceleration into $61.18.
A sustained move over $63.15 will signal the presence of buyers. This is a possible trigger point for an acceleration to the upside since the next targets are $66.00 and $66.39.
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.