U.S. West Texas Intermediate crude oil futures are trading lower after hitting a 5-month high earlier in the session. The early rally was fueled by a combination of dampened concerns about future demand in response to a stronger-than-expected GDP report from China, which showed an increase in refinery activity. A bigger reported weekly drawdown by the American Petroleum Institute also underpinned prices.
At 14:16 GMT, June WTI crude oil is trading $64.19, down $0.01 or -0.01%.
Traders could also be paring positions ahead of the U.S. Energy Information Administration’s weekly storage report, due to be released at 14:30 GMT. It is expected to show a 1.6 million barrel build.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous main top at $64.71. The main trend changes to down on a move through $63.15.
The early price action has also put the market in a position to post a potentially bearish closing price reversal top. This could trigger the start of a 2 to 3 correction.
The major support is a long-term Fibonacci level at $63.48, followed by a short-term retracement zone at $63.32 to $62.99. This zone held as support on Tuesday.
Daily Technical Forecast
Based on the early price action, the direction of the June WTI crude oil the rest of the session is likely to be determined by trader reaction to the steep uptrending Gann angle at $64.15.
A sustained move over $64.15 is likely to determine the direction of the June WTI crude oil futures contract the rest of the session. If this can create enough upside momentum then look for the rally to extend into yesterday’s close at $64.46 then today’s intraday high at $64.72. This is a potential trigger point for an acceleration to the upside.
A sustained move under yesterday’s close at $64.46 will signal the presence of sellers. Taking out the Gann angle at $64.15 will indicate the selling pressure is getting stronger. This could trigger a break into $63.92 and $63.65. The best downside target is a support cluster at $63.48, $63.40 and $63.32. Look for buyers to show up on a test of this area.
This article was originally posted on FX Empire
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