NEW YORK (TheLFB-Forex) -- There is very little in the way of news headlines to directly impact West Texas Intermediate (recently at $102.05) crude oil prices before weekly U.S. oil inventories are released Thursday.
Price action continues to be choppy but unable to easily break resistance.
The potential for new trade signals to form Wednesday is weak, and a reversal to support at 101.50 is likely.
Trade desk updates sent a trade signal to clients last week to buy WTI from 99.65, targeting 101.00. That move is completed, and traders should close that trade.
The outlook for United States Oil Fund (recently at $40.50), the exchange-traded fund that tracks oil: It should consolidate above $37.50, struggle to break $41.00 resistance and to continue to lag behind the main moves seen in WTI futures.
We expect a consolidation in crude oil prices in the near term. Any existing oil positions should be closely monitored while recent price action is absorbed. USO may struggle to offer a fair reflection of the choppy 24-hour moves crude oil is making.
Alternate Trade:
Investors who do not want to wait for their regional cash market to open, or do not have 24-hour access to the market they have open positions in, have access the 24-hour currency market.
Traders could trade the euro/dollar currency pair (EUR/USD) as a way of betting on global equity and commodity markets.
If it looks like WTI will be sold below $101.50, we will issue a potential trade signal on EUR/USD. Selling the euro and buying the dollar from 1.4360 draws in 1.4340 and 1.4270.
Oil Price Action:
Strong buying activity was seen at 97.00 on WTI in April and May. This potential price reversal and swing point area found buyers recently. We will closely monitor it as an area of strong support and will issue market alerts as sustainable momentum builds.
Main WTI support: 97.50. Main WTI resistance: 102.50.
ETF Price Action:
Strong buying activity was seen at 42.00 on USO in April and May. This potential price reversal swing point area will be closely monitored. Upside resistance will now be very strong, and a reversal lower from this area looks very likely.
