U.S. West Texas Intermediate crude oil futures are edging lower on Friday as traders try to consolidate prices after another week and month of losses. The current price action indicates that chart-watchers are recognizing the importance of a key 50% to 61.8% retracement zone of the entire late-April to late-August rally.
Does this week’s price action mean the selling is out of control? No. All we can surmise is that the fundamentals have worsened enough since about August 26 to take away about half of the entire rally from April.
Since that high was reached, we’ve seen U.S. stimulus funds evaporate as fiscal coronavirus aid expire, the end of the U.S. driving season, increased U.S. production, a failure to pass new fiscal stimulus legislation, increased production from Libya, OPEC+’s plan to continue to reduce its production cuts and a resurgence of the coronavirus in the United States, Europe, and Russia.
Given all that bearish news, traders really had no choice but to liquidate longs or go short since nearly all of the reasons to stay long had evaporated.
Weekly Technical Analysis
Weekly December WTI Crude Oil
Trend Indicator Analysis
The main trend is down according to the weekly swing chart. The trend turned down on Thursday when sellers took out the last swing bottom at $36.93. A trade through $41.90 will change the main trend to up.
The main range is $59.51 to $25.31. Its retracement zone at $42.41…