U.S. West Texas Intermediate crude oil futures are trading higher on Wednesday, but inside yesterday’s range. The price action suggests investor indecision and impending volatility. The indecision is likely being fueled by conflicting fundamentals.
Supporting the market are the OPEC-led production cuts and the U.S. sanctions against Iran and Venezuela. Keeping a lid on prices are concerns that a slowing global economy will eventually lead to lower demand.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside based on Tuesday’s closing price reversal top. A trade through $63.68 will confirm the chart pattern and possibly start a 2 to 3 correction.
A trade through $64.79 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $61.82 will change the main trend to down.
The first support is the major Fibonacci level at $63.45. This is followed closely by a short-term pivot at $63.30.
The main range is $58.17 to $64.79. If the trend changes to down then look for a correction into its retracement zone at $61.48 to $60.70.
Daily Technical Forecast
Based on the early trade, the direction of the May WTI crude oil futures contract is likely to be determined by trader reaction to the uptrending Gann angle at $64.32.
A sustained move over $64.32 will indicate the presence of buyers. If this creates enough upside momentum then look for a test of $64.79. Taking out this level will reaffirm the uptrend. It could also trigger an acceleration to the upside.
A sustained move under $64.32 will signal the presence of sellers. The first downside target is a support cluster at $63.45, $63.32 and $63.30. Look for a technical bounce on the first test of this area.
A trade through $63.30 will indicate the selling is getting stronger. This could trigger a further break into the uptrending Gann angle at $61.17.