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Crude oil futures rallied to a new multi-year high last week as speculators continued to bet the U.S. will walk away from the Iran nuclear deal when the deadline for the decision hits on May 12. Gains could be limited, however, by concerns over rising U.S. production, which should continue to rise along with the U.S. rig count.
Last week, June West Texas Intermediate crude oil settled at $69.72, up $1.62 or +2.38%.
Weekly Swing Chart Technical Analysis
The main trend is up according to the weekly swing chart. The trend isn’t close to turning down, but the market is in the window of time for a potentially bearish closing price reversal top, or higher-high, lower-close. This chart pattern, however, will take the entire week to form.
A trade through $69.97 will signal a resumption of the uptrend. If this move creates enough upside momentum, we could see a spike into the major 50% level at $72.86.
The first sign of weakness will be a move through $69.97 then a break back under last week’s close at $69.72.
On the downside, the nearest support is a pair of 50% levels at $63.63 and $62.84.
Weekly Swing Chart Technical Forecast
Based on last week’s close at $69.72, the direction of the crude oil market will be determined by trader reaction to $69.97.
Taking out $69.97 will signal the presence of buyers. If this move generates enough upside momentum then look for a possible surge into $72.86.
Taking out $69.97 then turning lower for the week will put the market in a position to form a potentially bearish closing price reversal top.
The inability to take out $69.97 will indicate the presence of buyers and that they are defending last week’s high. This is likely to occur if investors start to doubt the U.S. will leave the Iran nuclear deal.
This article was originally posted on FX Empire