Based on the early price action and the current price at $64.22, the direction of the May WTI crude oil futures contract on Tuesday is likely to be determined by trader reaction to yesterday’s close at $64.40.
U.S. West Texas Intermediate crude oil futures are trading lower shortly after the regular session opening on Tuesday after hitting a 5-month high earlier in the session. The early rally was driven by tightening supply and worries over a possible supply disruption due to a military conflict in Libya. Gains were limited by concerns that a slowing global economy would lead to lower future demand.
At 12:15 GMT, May WTI crude oil futures are trading $64.22, down $0.18 or -0.28%.
The main trend is up according to the daily swing chart. It was reaffirmed earlier in the session when buyers took out yesterday’s high. Retaking today’s intraday high at $64.79 will signal a resumption of the uptrend. The trend will change to down on a trade through $61.82.
Due to the prolonged move up in terms of price and time, the market is also ripe for a closing price reversal top. Today’s early price action suggests one may be forming.
On the downside, the first major support is a Fibonacci level at $63.45.
Based on the early price action and the current price at $64.22, the direction of the May WTI crude oil futures contract on Tuesday is likely to be determined by trader reaction to yesterday’s close at $64.40.
A sustained move over $64.40 will indicate the presence of buyers. This could trigger an acceleration over $64.79 later in the session.
A sustained move under $64.40 will signal the presence of sellers. This could trigger a break into the first uptrending support angle at $63.67, followed closely by $63.45. If this level fails then look for an acceleration into the short-term uptrending Gann angle at $62.82.
A close under $64.40 will form the closing price reversal top. If confirmed on Wednesday, this could lead to a 2 to 3 day correction.
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.