West Texas Intermediate crude oil futures are trading higher early Thursday after posting a marginal gain the previous session. Speculators continued to support the market due to a tightening supply situation. Prices also jumped following an unexpected fall in inventories in the U.S. As reported by the U.S. Energy information Administration, U.S. crude inventories dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels.
At 0730 GMT, July WTI Crude Oil is trading $71.84, up $0.28 or +0.39%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $71.95 will signal a resumption of the uptrend. There is no apparent resistance so if this rally were to come to a screeching halt, it would likely form a closing price reversal top, which would be a strong sign that the selling is greater than the buying at current price levels.
The contract 50% to 61.8% zone is $64.77 to $70.60. The market is currently trading on the bullish side of this zone. This is giving the market a strong upside bias. This also makes the Fib level at $70.60 key support. This is followed by $70.24. Taking out this bottom will change the main trend to down.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the July WTI crude oil futures contract on Thursday is likely to be determined by trader reaction to $71.95.
Taking out $71.95 will signal a resumption of the uptrend. If buyers continue to support the move then we could see a surge to the upside.
Taking out $71.95 then turning lower for the session will put the market in a position to form a potentially bearish closing price reversal top.
Traders should treat $71.95 like a pivot price.
This article was originally posted on FX Empire
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