May West Texas Intermediate crude oil futures are trying to hold on to earlier gains in the wake of a reversal to down in the stock market. The price action suggests that despite the earlier strength, the crude oil market is fragile and vulnerable to the downside.
Money managers are still holding on to massive long positions in Brent crude oil which suggests the market doesn’t have room to rally unless a fresh round of buyers come into the market.
The direction of the market today could be decided late in the session when the American Petroleum Institute (API) releases its weekly inventories figures. Their report is expected to show a rise of 1.7 million barrels in the week to March 30.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down on Monday when sellers took out $63.72. The new main top is $65.42. A trade through $62.80 will signal a resumption of the downtrend. The next main bottom target is $60.18.
The main range is $60.18 to $66.55. Its retracement zone at $63.37 to $62.61 is currently being tested.
The longer-term retracement zone at $62.08 to $61.02 is the next major support zone.
Daily Technical Forecast
Based on the early trade, the direction of the crude oil market the rest of the session is likely to be determined by trader reaction to the uptrending Gann angle at $63.43 and the 50% level at $63.37.
A sustained move over $63.43 will indicate the presence of buyers. This could create the upside momentum to challenge a downtrending Gann angle at $64.05. Since the trend is down, look for resistance on the first test of this angle.
A sustained move under $63.37 will signal the presence of sellers. The daily chart is wide open under this level with the next targets coming in at $62.80 and $62.61. Look for a possible acceleration to the downside if $62.61 fails as support with the next target coming in at $62.08 then $61.81.