Crude Oil Price Update – Short-covering Rally Over $62.61 Could Drive Market to $63.37

Increased demand for higher risk assets and the alleged bombing of a Syrian airbase by U.S. flyers is helping to boost May West Texas Intermediate crude oil futures early Monday. The move is helping to erase some of Friday’s steep loss that was fueled by a sharp break in U.S. equities and worries that China would impose tariffs on U.S. crude oil.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $61.81 will signal a resumption of the downtrend. If this creates enough downside momentum, we could see an eventual test of the next main bottom at $60.18.

On the downside, the key support zone is $62.08 to $61.02. This zone stopped the selling on Friday. Earlier today, the upper or 50% level of this zone at $62.08 provided support.

On the upside, the intermediate retracement zone at $62.61 to $62.37 is resistance. The short-term retracement zone at $64.18 to $64.74 is another resistance area.

Daily Technical Forecast

Based on the early price action, the direction of the crude oil market today is likely to be determined by trader reaction to the intermediate Fibonacci level at $62.61.

A sustained move over $62.61 will indicate the presence of buyers. This move could create enough upside momentum to challenge the intermediate 50% level at $63.37. If the buying continues to strengthen then look for the rally to possibly extend into $64.18 over the near-term.

A sustained move under $62.61 will signal the presence of sellers. This could trigger a break into a series of levels at $62.31, $62.08, $62.05 and last week’s low at $61.81.

Taking out $61.81 could drive the crude oil market into the next uptrending Gann angle at $61.24, followed by the long-term Fibonacci level at $61.02.