U.S. West Texas Intermediate crude oil futures posted a wild outside move on Friday before settling higher but near the middle of the range. Prices surged to a new high for the year as investors shrugged off President Trump’s tweets calling for OPEC to do something about rising prices. The rally was fueled by the notion that this weekend’s strategic meeting in Algiers would end without any major changes being made. Prices retreated after the surge following a report that OPEC is expected to discuss a 500,000 barrel per day increase in production.
November WTI Crude Oil settled at $70.78, up $0.46 or 0.65%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $71.80 will signal a resumption of the uptrend. A move through $67.79 will change the main trend to down.
The minor trend is also up. A trade through $69.98 will change the minor trend to down. This will also shift momentum to the downside.
The contract’s retracement zone is $65.15 to $71.80. After spending several months inside this zone, crude oil is attempting to breakout to the upside. If successful, this would represent a major long-term bullish move.
The short-term range is $67.79 to $71.80. Its 50% level at $69.79 is the first support.
The intermediate range is $66.67 to $71.80. Its retracement zone at $69.23 to $68.63 is the next support zone.
The main range is $63.69 to $71.80. Its retracement zone at $67.75 to $66.79 is the third potential support zone.
Even if there is a short-term correction, the market should continue to attract buyers because of the series of retracement zone support levels.
Daily Swing Chart Technical Forecast
Based on Friday’s price action and the close at $70.78, the direction of the November WTI Crude Oil futures contract is likely to be determined by trader reaction to the contract’s Fibonacci level at $70.86.
A sustained move over $70.86 will indicate the presence of buyers. If this move can generate enough upside momentum then look for buyers to make a run at taking out $71.80.
A sustained move under $70.86 will signal the presence of sellers. This could lead to a sell-off into the layers of support at $69.79, $69.23 and $68.63.
The key support area is the price cluster at $67.79 to $67.75.
Since the trend is up, buyers could come in on a test of any of these support levels. However, strong downside momentum could prevent any meaningful rallies.
Look for weakness early Monday if OPEC decides to increase production. The amount they are expected to discuss is 500,000 barrels. This won’t be enough to destroy the trend, but should be enough to limit gains.
This article was originally posted on FX Empire
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