Crude has traded in a range of $95 to $102 after settling below the 100-day average on May 11. A breach would position the July contract to rise near $106, a price that corresponds with both the 50-day moving average and the 76.4 percent retracement level on a Fibonacci study, said Carl Larry, Blue Ocean’s New York-based director of energy derivatives and research.
“We’re definitely targeting the 50-day moving average, which is around $106, as we see new money come in” at the beginning of June, Larry said. The 50-day average is at $106.17 and the 76.4 percent Fibonacci level is at $106.08.
Crude oil for July delivery gained 36 cents, or 0.4 percent, to settle at $100.59 a barrel May 27 on the New York Mercantile Exchange. U.S. financial markets were closed yesterday for the Memorial Day holiday. The contract edged up 0.5 percent last week.
If oil fails to breach the 100-day average this week, it’s likely to test support at the 50 percent Fibonacci level, or $95.79, Larry said. Below that, it will look to the 200-day moving average at $93.89, he said.
Technical analysts use historical chart patterns and tools such as moving averages to predict potential future price movements.