Crude Oil Update – Early Gains Erased by Stronger Dollar

U.S. March West Texas Intermediate Crude Oil futures are trading slightly lower shortly before the regular session opening. Earlier in the session, the market was trading at $53.30 but has since pulled back into $52.83.

The rebound rally in the U.S. Dollar is responsible for the intraday setback. The market remains essentially rangebound with bullish traders citing optimism over the OPEC/non-OPEC deal to cut production as their reason for buying and increased U.S. production capping rallies and weighing on prices.

Technical Analysis

The main trend is down according to the daily swing chart. The trend will turn up on a trade through $54.32. A move through $51.72 and $51.59 will signal a resumption of the downtrend.

The main range is $56.18 to $51.59. Its retracement zone at $53.89 to $54.43 is the primary upside target.

The short-term range is $51.59 to $54.32. Its retracement zone at $52.96 to $52.63 is currently being tested.

Forecast

Based on the current price at $52.83, the direction of the market today is likely to be determined by trader reaction to a cluster of numbers at $52.72, $52.68 and $52.63.

A sustained move over $52.72 will signal the presence of buyers. This could generate enough upside momentum to challenge the short-term 50% level at $52.96. Overtaking this level will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the next target the main 50% level at $53.89.

A sustained move under $52.63 will indicate the presence of sellers. The daily chart is open to the downside so we could see an acceleration into the next uptrending angle at $52.15. This is the last potential support angle before the $51.59 main bottom.

Keep an eye on that support cluster at $52.72 to $52.63 all session. Watch the order flow at that zone to determine if the buyers or sellers are in control.