U.S. West Texas Intermediate crude oil futures rose on Thursday, as the bullish impact of a decline in U.S. oil and fuel inventories was offset by a stronger U.S. Dollar and a renewed wave of coronavirus cases in Europe that led several countries to reimpose travel restrictions.
The market is also being underpinned by the OPEC+ production cuts, but capped by subdued fuel demand. With the pandemic limiting travel in the U.S., the four-week average of gasoline demand was 8.5 million barrels per day (bpd) last week, the government data showed on Wednesday, down 9% from a year earlier.
At 21:00 GMT, December WTI crude oil futures are trading $40.44, up $0.22 or +0.55%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at $37.11 on September 9.
A trade through $44.33 will change the main trend to up. A move through $37.11 will signal a resumption of the downtrend.
The minor trend is also down. A trade through $42.02 will change the minor trend to up. This will also confirm the shift in momentum.
The short-term range is $44.33 to $37.11. Its retracement zone at $40.72 to $41.57 is acting like resistance.
The minor range is $37.11 to $42.02. Buyers are treating its retracement zone at $39.57 to $38.99 like support.
Like we’ve said all week, crude oil is likely to become rangebound just like it was throughout July and August but only at lower price levels. The same OPEC+ cuts are preventing a total price collapse, but the resurgence in COVID-19 cases has cut demand and lowered the top.
In a rangebound market, the best strategy is to buy support and sell resistance. The second strategy is to watch the price action at each top and bottom zone then read the order flow to determine whether the market is getting ready to break out of the range. Essentially, you can be a trader or an observer.
Keep in mind that the longer the market remains rangebound, the bigger the potential breakout. We know the price levels, we just need to see volume behind the moves.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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