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Crude Oil Price Update – Big Decision for Bulls on Test of Major Weekly 50% Level at $59.63

U.S. West Texas Intermediate crude oil futures finished sharply higher last week, putting the market in a position to challenge a major 50% to 61.8% retracement zone. Reaction to this zone is likely to determine the longer-term direction of the market.

The market was underpinned last week by the OPEC-led production cuts and U.S. sanctions against Iran and Venezuela. Triggering a surge to the upside was an unexpected drop in U.S. crude oil inventories. Helping to limit gains were continuing concerns over risking U.S. shale production and a warning from the International Energy Agency about lower global demand.

Last week, May WTI crude oil settled at $58.82, up $2.39 or +4.24%.

Weekly May WTI Crude Oil
Weekly May WTI Crude Oil

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. A trade through $59.25 will signal a resumption of the uptrend. A move through $54.87 will change the main trend to down.

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The main range is $75.80 to $43.46. Its retracement zone at $59.63 to $63.45 is the primary upside target. Trader reaction to this zone will determine if the bulls are taking greater control, or if sellers are re-exerting their presence.

The short-term range is $43.46 to $59.25. If the trend changes to down then look for the selling to possibly extend into its retracement zone at $51.36 to $49.49.

Weekly Technical Forecast

Based on last week’s price action, the direction of the May WTI crude oil futures contract this week is likely to be determined by trader reaction to the major 50% level at $59.63.

Bullish Scenario

Taking out last week’s high and sustaining a rally over the major 50% level at $59.63 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the resistance cluster formed by the major Fibonacci level at $63.45 and the downtrending Gann angle at $63.80.

Bearish Scenario

The inability to overcome $59.63 will signal the presence of sellers. If this move attracts further selling pressure then look for a potential break into the uptrending Gann angle at $55.46. This is followed by the main bottom at $54.87. If this fails then look for the selling to possibly extend into the short-term 50% level at $51.36.

Closing Price Reversal Top Possibility

Taking out $59.25 then turning lower for the week will put May WTI crude oil in a position to post a potentially bearish closing price reversal top. If confirmed, this chart pattern could lead to a 2 to 3 week correction.

This article was originally posted on FX Empire

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