The direction of the December WTI crude oil futures market into the close is likely to be determined by trader reaction to $38.74.
U.S. West Texas Intermediate (WTI) crude oil futures are inching lower on Thursday but remain near a two-week high as investors express doubts over whether there will be a huge stimulus package to bolster the economy in the face of rising coronavirus cases that threaten to derail the demand recovery.
At 15:19 GMT, December WTI crude oil futures are trading $39.23, up $0.08 or +0.20%.
WTI crude oil futures are also being underpinned by growing expectations that OPEC and its allies, would hold off on bringing back 2 million bpd of supply in January, given demand has been sapped by new COVID-19 lockdowns.
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on November 2 and its subsequent confirmation the next day.
The main trend will change to up on a move through the nearest main top at $41.90. A move through $33.64 will signal a resumption of the downtrend.
The short-term range is $41.90 to $33.64. Its retracement zone is $37.77 to $38.74. The market is currently trading on the strong side of this area, putting it in a bullish position. This area is new support.
Additional support is a minor pivot at $36.45 and a major 50% level at $34.82.
The early price action indicates the direction of the December WTI crude oil futures market into the close is likely to be determined by trader reaction to the short-term Fibonacci level at $38.74.
A sustained move over $38.74 will indicate the presence of buyers. The next upside target is the minor top at $39.83. Taking out this level will change the minor trend to up. This could trigger a near-term acceleration to the upside with the main top at $41.90 the next major upside target.
A sustained move under $38.74 will signal the presence of sellers. This could trigger a break into the 50% level at $37.77. This is a potential trigger point for an acceleration to the downside.
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James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.