The direction of the market into the close on Friday will be determined by trader reaction to $63.37.
U.S. West Texas Intermediate crude oil futures are trading lower late in the session on Friday, but remained in a position to post a strong weekly gain. The market is being supported by signs of economic recovery in the United States and China and a stronger demand outlook from the IEA and OPEC. This week’s EIA inventories report also provided support, helping to offset concerns about rising COVID-19 infections in other major economies.
At 17:09 GMT, June WTI crude oil is trading $63.35, down $0.17 or -0.25%.
China’s first-quarter gross domestic product jumped 18.3% year on year, official data showed. That followed a big increase in U.S. retail sales and a drop in unemployment claims released Thursday.
The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a move through $66.15.
A trade through $57.29 will signal a resumption of the downtrend. This is highly unlikely, but due to the prolonged move up in terms of price and time, the market is inside the window of time for a closing price reversal top.
The short-term range is $67.29 to $57.29. The market is currently testing its retracement zone at $62.29 to $63.47. A failure to hold this area will form a potentially bearish secondary lower top.
The new minor range is $57.29 to $63.94. Its 50% level at $60.61 is potential support.
The main range is $51.04 to $67.29. Its retracement zone at $59.17 to $57.25 is the best support. It’s controlling the near-term direction of the futures contract.
The direction of the market into the close on Friday will be determined by trader reaction to $63.37.
A sustained move over $63.37 will indicate the presence of buyers. Overtaking $63.47 will indicate the buying is getting stronger. Taking out the intraday high at $63.94 could trigger a late session acceleration to the upside.
A sustained move under $63.37 will signal the presence of sellers. This could trigger a late session break into $62.29. This is a potential trigger point for an acceleration into the minor pivot at $60.61.
A close under $63.37 will form a closing price reversal top. This won’t change the main trend to down, but if confirmed, this could trigger the start of a 2 to 3 day correction with $60.61 the minimum downside target.
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.