May West Texas Intermediate Crude Oil futures are trading lower and near the low of the session. The price action reflects concerns over the escalation of a trade war between China and the United States as well as a stronger U.S. Dollar.
Volatility could hit the crude oil market following the release of the U.S. Non-Farm Payrolls report at 1230 GMT because a stronger-than-expected number could drive up the U.S. Dollar, making dollar-denominated crude oil a less-desirable asset.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $62.06 will signal a resumption of the downtrend. This move could trigger the start of a steep correction.
The minor trend is also down. A trade through $64.12 will change the minor trend to up.
The price action is also being manipulated by a series of retracement levels.
On the upside, resistance is lined up at $63.23, $63.74 and $64.31.
On the downside, retracement level targets come in at $62.45, and $62.08. The latter is the trigger point for an acceleration to the downside with $61.02 the next major target.
Daily Swing Chart 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 50% level at $63.23.
A sustained move under $63.23 will signal the presence of sellers. This could trigger a break into a loose cluster of levels at $62.45 to $62.06. The market could rest on a test of this area. We could even see a technical bounce.
However, the trigger point for an acceleration to the downside is $62.06. If this price is taken out with strong selling volume then we could see a test of $61.02 over the near-term.
Overcoming and sustaining a move over $63.23 will indicate the return of buyers. This could trigger a labored rally with potential targets coming in at $63.74, $64.12 and $64.31. The latter is the trigger point for a possible acceleration to the upside.