Are the crude oil bears gearing up to take control as we edge closer to the end of the year? Let’s dive into the critical technical levels visible on the 4-hour chart.
In recent times, WTI crude oil has settled into a defined range, hovering between $67.00 and $71.00. As it approaches a significant resistance level, the holiday season and a quieter market environment suggest that technical factors might have a heavier influence on short-term price movements, unless, of course, an unexpected event shakes things up.
It’s crucial to remember that fundamental factors usually shape market direction and volatility. If you haven’t kept up with the euro and the Canadian dollar, it’s about time you checked the economic calendar and caught up on the latest daily fundamentals!
The price action is exhibiting a clear sideways range, with an imminent test of the upper boundary near $71.00. Notably, the 100 SMA and 200 SMA are converging close to the monthly pivot point around $69.38, crafting a solid support zone that has successfully held for about a month now.
Considering different scenarios, those leaning towards a bearish outlook might focus on reversal indicators around the $71.00 range resistance. However, given the daily average true range of $1.60, prices might push towards this resistance level before sellers effectively mark a short-term peak.
Bearish patterns and resistance could entice more sellers, potentially driving prices back down to the $69.00 support zone, where the moving averages and the monthly pivot point align.
This support area calls for careful evaluation regarding profit-taking strategies. If the price breaks below this support, momentum sellers might jump in, aiming for the range’s lower boundary at $67.00.
On the other hand, for those with a bullish perspective, the $69.00 confluence zone has been a reliable launching pad for brief upward movements, typically yielding $1.00 to $2.00 increases before selling pressure comes back into play. This zone might continue to draw buyers looking for short-term opportunities as long as the range-bound conditions hold. If bullish patterns materialize, we could see a push towards the range’s upper limits before the year wraps up, especially considering the daily ATR of around $1.60.
No matter which direction you decide to trade, always prioritize proper risk management and stay alert to any economic events that might disrupt these range-bound patterns during the holiday period.
