Oil in New York will trade in a $5 range in the short term as prices are locked in a “stalemate,” according to broker Newedge.
Crude for October delivery is stuck between $70.76 and $75.59 a barrel as price movements illustrated by candlestick charts show a narrow gap between the daily opening level and closing for trading on Sept. 3 and Sept. 7, said Veronique Lashinski, a Chicago-based analyst at the brokerage. That means neither buyers with expectations of rising oil nor sellers expecting a decline are able to influence direction, she said.
“The last two days’ price action featured small-bodied candlesticks which illustrate a stalemate between the bulls and the bears,” she said in a report yesterday. “Our bias is neutral in the short term.”
Crude prices were unable to break the resistance line of $75.59 last week, Lashinski said. A close above that level “would be a sign of short-term strength.”
Oil would still face strong resistance at the $77 a barrel to $77.10 level as that is near where the 50-day moving average and the 50 percent retracement Fibonacci level are starting to converge, the report said.
The 50-day moving average is at $76.73 a barrel today and the 50 percent Fibonacci retracement is at $77.08.
A close below $70.76 a barrel would “point to the immediate resumption of the decline,” she said. Crude for October has dropped 12 percent from its intraday high of $83.40 on Aug. 4. Oil was at $73.69, down 40 cents, on the New York Mercantile Exchange at 10:28 a.m. Singapore time.
The Fibonacci sequence, identified by Italian mathematician Leonardo Fibonacci in the 13th century, is used by traders to predict points of support and resistance as a market retraces earlier movements.