As we start another trading week I’ve simplified the daily chart for WTI oil to show more clearly the key technical levels which continue to dominate this timeframe and cap longer-term advances for the commodity. And it’s not hard to see where the problem lies and it is a level I have highlighted in previous posts and shown with a blue dashed line of the accumulation and distribution indicator at $66.20 per barrel. As can be seen, this level has been tested as far back as March this year and repeatedly in May with three failed attempts thus far, one of which was last week. The accumulation and distribution indicator presents a visual picture of the strength of such levels by thickening the line each time a failed attempt occurs and so gives a visual representation from a price-based perspective. In addition, this level coincides with well-developed volume-based resistance which extends through to $67 dollars per barrel, and as a result, it will only be once these two regions have been breached that we can expect to see oil break out of the current trading range. Thursday and Friday’s price action saw the creation of a classic two bar reversal on good volume, so expect to see a bounce in the price of oil in the early part of the week.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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