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Crude Oil Price Update – Rangebound Trade Expected as Hedge Funds Turn Neutral

By:
James Hyerczyk

The market is not likely to move “big” in either direction until there is a breakout through the series of support and resistance levels.

WTi Crude Oil

U.S. West Texas Intermediate crude oil futures are trading lower on Monday as uncertainty about the future direction of prices and the course of the coronavirus pandemic compounds the normal summer-time trading slowdown, encouraging previously bullish hedge funds to head to the sidelines.

Overall, the hedge fund community is running a neutral position in petroleum, but slightly weighted towards crude rather than fuels.

At 14:10 GMT, September WTI crude oil futures are trading $40.34, down $0.41 or -1.01%.

Fundamentally, investors are concerned about the possibility of a recurring pandemic and extended slump in oil consumption. Furthermore, they are worried about the possibility of higher supply after OPEC and its allies agreed last week to taper their production cuts.

Daily September WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $41.74 will signal a resumption of the uptrend. The main trend will change to down on a move through the last swing bottom at $38.77.

On the upside, the resistance is a minor top at $41.46, a major 50% level at $41.72, a main top at $41.74 and the top of a gap at $42.49.

On the downside, the first target is a 50% level at $39.53, followed by a main bottom at $38.77 and a retracement zone at $38.38 to $37.58.

Daily Swing Chart Technical Forecast

There is no trigger point for an acceleration in either direction today. The market is currently in a position to move in either direction.

The gradually changing fundamentals suggest a rangebound trade over the near-term. The market is not likely to move “big” in either direction until there is a breakout through the series of support and resistance levels.

About the Author

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.

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