Yahoo Finance Crude Oil Price Update – Market Set-up for Near-term Pullback into $60.44
February West Texas Intermediate Crude Oil futures are trading lower on Friday after hitting a 3-year high the previous session. Traders are rolling into the March contract but the higher volume is still in the February futures contract. We’ll pick up the March contract on Monday.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, it looks as if momentum is shifting to the downside. Yesterday’s rapid rally looks like a blow-off top. In my opinion, the news about OPEC extending the production cuts beyond December 2018 is lame. Anyone who bought yesterday’s price surge through a major 50% level at $64.02 is trapped and they may be forced into a panic sell situation.
The trend isn’t close to turning down, but there is room for a near-term correction.
The main range is $56.11 to $64.77. Its retracement zone at $60.44 to $59.42 is the primary downside target.
Daily Forecast
Based on the early price action, the direction of the market today is likely to be determined by trader reaction to the major long-term 50% level at $64.02.
A sustained move under this level will indicate the presence of sellers. They are probably taking profits or paring positions. I don’t think we’re see aggressive short-selling at this time.
The first downside target is the former top at $62.02.
Overcoming $64.02 will signal the return of buyers. If this generates enough upside momentum, we could see a retest of $64.77.
As I said earlier, we may have seen a blow-off top on Thursday. Additionally, we have to consider the influence of “The Herd Theory”. In other words, most of the rally this year has been driven by aggressive fund buying. If one decides to start selling then they all may start selling. This could lead to a substantial correction over the near-term with $60.44 the minimum downside target.
This article was originally posted on FX Empire
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