Oil Futures Technical Analysis

Light Crude Oil Futures Technical Analysis – Key Junction at $70.3

Hello, this is Itai Levitan at ForexLive.com, bringing you a technical analysis on Light Crude Oil Futures (Ticker: CL). As expected and communicated in my last oil technical analysis, the current touchpoint at the top pane of this channel is playing out as anticipated. Sometimes, you need to set your channels at the close of the candle rather than the low, as in this case, to gain more agreement. This approach helps align better with where price is reacting, as different lows can draw varied lines. The key is to identify where the market is showing the best response.

Confirming the Channel

In this scenario, we see clear validation of the channel due to the perfect touchpoints we’ve identified. We’ve had three significant touchpoints, and now we’re observing a fourth, only a few ticks away. This is a legitimate interaction, reinforcing the channel’s validity.

Focus on the $70.3 Level

Today, I’m watching the $70.3 level closely, which may not appear on this chart but is evident on others I’ve analyzed. Around this level, we could see bulls trying to defend the price, particularly at $70.28 to $70.3, to prevent further declines. This could lead to a potential handle formation, followed by a breakout. While the bullish case remains alive, it’s more of a short-term scenario. In the medium term, I’m inclined to think we’ll head towards $70.3, as this level aligns with key market movements.

The Contract Rollover Gap

Another element to consider is the contract rollover gap, which is situated around $70.1 (where the blue line is). Typically, contract rollover gaps tend to fill eventually, although the timing is uncertain. This gap presents another level of interest, reinforcing the $70.1-$70.3 zone as an area to watch closely.

Current Trend and Potential Mid-Channel Support

Right now, we’re trending down, and any potential bullish case will only become actionable if we create another touchpoint on the top band of the channel. Otherwise, the trend remains downward. We might even see a move towards the mid-channel area, indicated by the dotted line, which could bring the price to around $67. While it’s too early to predict, this could be a potential area of support if we continue to trend lower.

Key Levels for Swing Trades

If we revisit the low from September 23, 2024, at $69.49, this could be a swing long opportunity, even if temporary. Profitable shorts are likely to cover part of their positions around this level, making it an interesting point to consider for a counter-trend long trade.

Adapting to Market Conditions

For now, I’m primarily looking at the contract rollover gap to fill, and I’m keeping a close eye on the $70.3 level later today to see how price reacts. The longer-term trend is still downward, but I’ll quickly adapt if we see a breakout, retest, and subsequent upward move. Until then, my bias remains bearish.

Final Thoughts

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