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Crude Oil – Price action, OPEC and Retest pattern..

Following my last week update on Crude oil, Price action tested and retraced from 50$ mark. Contemporary price action begs the question about market structure. whether is it a bottom or not paradox is bothering investors. Fundamentals are confusing as price action diverges from the usual news effects. In terms of global events – still US inventories are leading the price behavior.

Below is 4h chart of Crude oil with Price action analysis.

on Crude oil, Price action tested and retraced from 50$ mark

1. Is price action making a structural shift?

In my earlier article, I provided a detailed picture on mark up structure. I pointed out the nuances and antithetical factors within the mark up phase. OPEC meeting ended without any specific agreement on production, the event itself didn’t have much effect on price action. Usually OPEC reports and events make the market volatile. But recent behavior was only contradiction to the fact.

2. Market capped further advances at 50.00 key level.

Crude oil failed to break the resistance level at 50.00. Price action tested the resistance level constantly on two occasions. Lower time frame price action indicated the traps and ambiguity associated with this market structure formation.

3. Retest Failure setup at 50.00 key level.

Market provided a setup opportunity for price action traders exactly after second test failure at 50.00. I have mentioned several times about retest pattern in my articles. we can see significance of the pattern in lower time frame charts. Retest pattern causes non-sustainable market pressure which results in shakeout of weak hand players.

a setup opportunity for price action traders - Retest Pattern

4. Potential support zone is at 48.00-47.25.

Price action might react at this specific support zone due to two factors. It’s a confluence level which normally has supply-demand imbalances. Another reason is that 47.75 is a previous swing low. Keep a tab on these key levels to figure out market sentiment.

5. Monitor price action development within the structure.

Traders should focus on price action within the structural range between 47.25 -50.00. Market should clearly break either one of these key levels to develop a trend. Failure to break these levels might result in ranging structure. We need to watch and trade resulting price action instead of predicting the markets. Today’s market close might offer clues about directional bias.

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