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James Hyerczyk
Comex Gold

U.S. West Texas Intermediate crude oil futures closed lower on Thursday after hitting a 4-month high earlier in the session. The market was supported by a tightening of global supply, OPEC-led production cuts and U.S. sanctions against key producers Iran and Venezuela. Concerns over demand continued to keep a lid on prices especially after the Fed cited on Wednesday a weakening domestic and global economy as two reasons for their decision to put future rate hikes on hold.

At 21:19 GMT, May WTI crude oil is trading $59.87, down $0.36 or -0.60%.

Daily May WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Thursday’s closing price reversal top, the second in three days, may be an indication the selling is greater than the buying at current price levels. The chart pattern has the potential to kill the rally.

The formation of a closing price reversal top does not mean the trend has turned lower, or is even in a position to change the trend to down. It could, however, trigger the start of a 2 to 3 day correction. The chart pattern will be confirmed on a trade through $59.66.

The major long-term retracement zone at $59.63 to $63.45 is the primary upside target. The market is currently trading inside this zone just above the 50% level at $59.63. Trader reaction to this zone will determine the longer-term direction of the May WTI crude oil market.

The new short-term range is $54.87 to $60.39. If the closing price reversal top is confirmed then its retracement zone at $57.37 to $56.78 will become the primary downside target.


Daily Swing Chart Technical Forecast

Based on the close at $59.87 on Thursday, the direction of the May WTI crude oil market on Friday is likely to be determined by trader reaction to the major 50% level at $59.63.

Bullish Scenario

A sustained move over $59.63 will indicate the presence of buyers. They will be trying to defend against a confirmation of the closing price reversal top. If they can generate enough upside momentum then look for a possible test of Thursday’s high at $60.39.

Taking out $60.39 will signal a resumption of the uptrend. The next major upside target is the 200-day moving average at $60.88.

Bearish Scenario

Taking out $59.66 will confirm the closing price reversal top, but breaking through $59.63 could trigger an acceleration to the downside. This could lead to a sizable break since the nearest downside target is the minor bottom at $58.56.

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