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West Texas Intermediate Consolidation

There is very little in the way of news headlines to impact crude oil valuations, potential moves look set to come mainly from overall global market sentiment to commodity risk outlooks.

Trade desk updates have highlighted continued consolidation above support at 95.00 on West Texas Intermediate (NYSE:WTI).

USO, (the exchange traded fund that tracks oil momentum) is consolidating above support at 37.50. Expectancy is for a break higher in crude prices if global equity markets can find buyers.

Any existing short-oil positions should be closely monitored while recent price action is absorbed, as potential reversal signals were trying to form on Friday.

Price Action:
There was strong buying activity at 97.00 on WTI recently, which is now a potential price reversal area of note. Main support on WTI is at 96.50, support on USO (ETF) is at 43.20. Resistance on WTI is at 101.50, resistance on USO (ETF) is at 47.50.

These areas will be closely monitored and market alerts sent to subscribers as things unfold.

The daily trading range is $2.70, which is above the historical norm and indicates solid speculative interest. The 50-day Simple Moving Average (NYSE:SMA) is @ 106.00. The 20-day SMA is @ 108.30. WTI has a 36-month 75% correlation to S&P moves, and a 90% correlation to the euro (Eur/Usd).

Potential signals to buy WTI from 101.00 were forming on Friday, but failed to confirm that both potential and momentum would be strong enough to easily follow through. Clients will be notified when price action breaks near-term resistance areas and signal confirmation is in place.  

Sentiment towards WTI trade is mixed after recent tests of support held steady. Price action favors a bounce off support that buys the recent dips. Traders committing to oil trades at these levels need to reduce trade size, as volatile intra-day trading patterns are likely to continue in the near-term.
The detail below forms a part of the in-depth daily analysis provided to subscribers. This helps guide traders with analysis on intra-day price movement, trend, and momentum. Clients will note how regularly the Swing Point and Support or Resistance areas below are used each day.

Content taken from TheLFB Trade Plans

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