It was another week of promising much and delivering little for the price of oil as the early surge higher of Monday and Tuesday was duly snuffed out with the reversal over the second half of the week. Whilst WTI crude oil futures finished with net gains, the longer-term outlook remains negative, and as I have said before, congestion is set to continue for some yet as the lack of demand continues to cap any moves higher.
From a technical perspective, it was once again the volume point of control which is key, acting as it does as the fulcrum of the market where price agreement is reflected and which continues to remain anchored in the $40.70 per barrel area denoted with the yellow dashed line. The two-day rally of Monday and Tuesday was supported on good volume, but it was Wednesday’s price action which sounded the death knell, making the rally short-lived, as the daily closed with a deep wick to the upper body on good volume and below the deep resistance at $42 per barrel denoted with the red dashed line of the accumulation and distribution indicator. This is a significant level and one which has been tested many times before, hence it’s strength. Thursday’s candle further confirmed the weakness with a repeat on good volume, with Friday then taking the price of oil back to the VPOC once more where it is likely to remain for some time yet. There is an OPEC-JMMC meeting scheduled for today and tomorrow but as this is more of a talking shop it is unlikely to have a great impact on oil prices longer term.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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