Crude Oil Update – Hedge Funds Holding Record Long Positions

April West Texas Intermediate crude oil is called higher shortly before the regular session opening. The market appears to be consolidating for a fourth day, but there also seems to be a bias to the upside. Perhaps investors are betting that compliance with OPEC’s plan to cut output will offset some of the increased production in the U.S.

Technical Analysis

The main trend is up according to the daily swing chart. Since turning up early last week, the market has moved sideways but within striking distance of last week’s high at $55.03. A trade through this level will signal a resumption of the uptrend. A move through $53.12 will turn the main trend to down.

The main range is $56.92 to $51.86. Its retracement zone at $54.39 to $54.99 has been acting like resistance. It is essentially controlling the longer-term direction of the market.

Forecast

Based on the current price at $54.42, the direction of the crude oil market today is likely to be determined by trader reaction to the 50% level at $54.39.

A sustained move over $54.39 will likely lead to a labored rally because of angles at $54.61, $54.62 and $54.86 and the main Fib level at $54.99, followed closely by last week’s high at $55.03.

The trigger point for an acceleration to the upside is the January 17 main top at $55.16. Taking out this level with conviction could fuel a rally into the next downtrending angle at $55.76.

A failure to overcome $54.39 will signal the presence of sellers. This could trigger a break into the short-term angle that has been providing guidance since February 16. It comes in at $53.87 today. If it fails then look for the break to extend into $53.36, followed by the main bottom at $53.12.

Watch the price action and read the order flow at $54.39. This should tell us whether the buying is getting stronger, or if sellers are retaking control.