U.S. West Texas Intermediate crude oil futures finished higher on Monday but the trading was mostly mixed. Helping to underpin prices was the news that Saudi Arabia will voluntarily deepen oil output cuts from June as low oil prices are causing huge pain to the kingdom’s budget. Gains were limited, however, by concerns over weak global demand due to lockdowns to contain the coronavirus pandemic.
At 20:45 GMT, July WTI crude oil futures are trading $25.44, down $0.73 or -2.79%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $35.18 will change the main trend to up. A move through the last main bottom at $17.27 will signal a resumption of the downtrend.
Last week’s closing price reversal top at $27.98 stopped some of the momentum that had been developing over the past two weeks.
The intermediate range is $35.18 to $17.27. Its retracement zone at $26.23 to $28.34 is resistance. This zone stopped the rally at $27.98 and has been providing resistance for four sessions.
The short-term range is $17.27 to $27.98. Its retracement zone at $22.63 to $21.36 is the next potential downside target.
Based on Monday’s price action, the direction of the July WTI crude oil market on Tuesday is likely to be determined by trader reaction to the 50% level at $26.23.
A sustained move under $26.23 will indicate the presence of sellers. If this move creates enough downside momentum then look for a possible break into the short-term retracement zone at $22.63 to $21.36. Buyers could come in on a test of this zone. They are going to try to form a secondary higher bottom.
A sustained move over $26.23 will signal the presence of buyers. This isn’t bullish per se. Buyers are going to have to overcome the closing price reversal top at $27.98 then the Fibonacci level at $28.34 before it can breakout to the upside.
It seems the producers are doing their part to limit supply which is providing support. However, traders aren’t too optimistic about generating demand because it can’t be predicted. No one is certain if the lifting of the lockdowns will work and there is evidence of new cases in areas thought to have the coronavirus under control.
This article was originally posted on FX Empire
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