U.S. West Texas Intermediate crude oil futures are edging higher early Monday, hitting another multi-year high as global supply remained tight amid solid fuel demand in the United States and around the world as other major economies continued to recover from coronavirus pandemic-induced weakness.
At 05:01 GMT, December WTI crude oil is trading $84.60, up $0.84 or +1.00%.
The market is currently in a position to accelerate to the upside with $90 per barrel, once a distant thought, now on the radar. The supply/demand situation is bullish, but the market will face headwinds if coronavirus cases jump again in certain key areas including the U.S., U.K., Russia and China. Another surge probably won’t derail the longer-term uptrend, but it could trigger a short-term correction.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out Friday’s high at $84.22. A trade through $80.78 will change the main trend to down.
Due to the prolonged move up in terms of price and time, there is also the possibility of a closing price reversal top. This won’t be a trend-changer, but it will indicate the selling is greater than the buying at current price levels, setting up the possibility of a near-term correction.
The minor range is $80.78 to $84.76. Its 50% level or pivot at $82.77 is the nearest support. The second minor range is $78.78. Its 50% level comes in at $81.77. The 50% level will move higher as the market moves above $84.76.
Daily Swing Chart Technical Forecast
The direction of the December WTI crude oil futures contract on Monday will be determined by trader reaction to $83.76.
A sustained move over $83.76 will indicate the presence of buyers. Taking out the intraday high at $84.76 will indicate the buying is getting stronger with a seven-year high at $85.25 the next target.
Taking out $85.25 will indicate the buying is getting stronger. This is also a potential trigger point for an acceleration to the upside since the next major target is $89.93.
Look for heightened volatility as the market moves higher.
A sustained move under $83.76 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the first pivot at $82.77.
Since the main trend is up, look for buyers on the first test of $82.77. If it fails, prices could collapse into $81.77.
A close under $83.76 will form a daily closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.
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This article was originally posted on FX Empire