Crude Oil Price Update – Strengthens Over $63.15, Weakens Under $62.15Based on last week’s close at $63.55, the direction of the crude oil market this week is likely to be determined by trader reaction to the short-term Fibonacci level at $63.15.
April West Texas Intermediate crude oil futures closed higher last week, settling at $63.55, up $2.00 or +3.25%. Early in the week, the market was pressured by a stronger U.S. Dollar which weakened foreign demand. However, oil prices reversed the earlier losses following the shutdown of the El Feel oilfield in Libya. Additional support was provided by an unexpected drop in U.S. crude stockpiles.
Weekly Technical Analysis
The main trend is up according to the weekly swing chart. However, the market has been consolidating since the multi-year top was reached the week-ending January 26. A trade through $66.39 will signal a resumption of the uptrend.
A trade through $57.90 will not change the main trend to down, but it will signal that the selling is getting stronger.
The main range is $50.19 to $66.39. Its retracement zone at $58.29 to $56.38 is the first support zone. It partially overlaps a major retracement zone at $56.90 to $54.66. This area is controlling the longer-term direction of the market.
The short-term range is $66.39 to $57.90. Its retracement zone is $62.15 to $63.15. This zone is controlling the short-term direction of the oil market. Closing above this zone last week is giving the market an upside bias.
Weekly Technical Forecast
Based on last week’s close at $63.55, the direction of the crude oil market this week is likely to be determined by trader reaction to the short-term Fibonacci level at $63.15.
A sustained move over $63.15 will indicate the presence of buyers. Increased buying volume could generate the upside momentum needed to challenge the main top at $66.39.
A sustained move under $63.15 will signal the return of sellers. This could drive the market into the 50% level at $62.15.
Taking out $62.15 could trigger an acceleration to the downside with the next major target the uptrending Gann angle at $60.19. This angle provided support the last two weeks. Since the main trend is up, we should look for a technical bounce on a test of this angle.
If $60.19 fails as support then look for a possible break into $58.29, $57.90 and $56.90.