WTI Crude Oil Tests Yearly 62% Fibonacci Retracement

Posted Monday, December 7, 2020 by
Shain Vernier • 2 min read

The markets are off and running for the week, although the action is a bit slow. At the midpoint of the Wall Street trading day, the DJIA DOW (-141), S&P 500 SPX (-5), and NASDAQ (+49) are trading mixed. It was another COVID-19-dominated weekend news cycle as the contagion continues to extend its global reach. Despite the headlines, WTI crude oil is hanging in bullish territory and testing a key Fibonacci resistance level.

On the economic calendar, the only thing out this morning was the weekly U.S. Treasury auctions. Here’s a quick look at the highlights:

Event                                              Actual              Previous

3-Month T-Bill Auction                  0.080%             0.085%          

6-Month T-Bill Auction                  0.09%                0.09%

All in all, there wasn’t much action on the bond front. As has been the case over the past year or so, investors are more interested in equities market exposure than bonds. Rates of return on Treasuries are near record low levels, prompting most institutional traders to flood into commodities, stocks, or currencies. At this point, U.S. Treasuries aren’t attracting much interest from the financial community.

On the other hand, WTI crude oil is putting together a strong Q4 2020. Let’s dig into the weekly technicals and take a look at a key Fibonacci resistance level.

January WTI Tests 62% Yearly Fibonacci Retracement

The chart below gives us a picture of January WTI crude as of last Friday’s close. As you can see, price has stalled just below the yearly 62% Fibonacci retracement. This is a key level; if prices close above $46.43 today, a bullish breakout toward $50.00 may be in the cards later this week. 

January WTI Crude Oil Futures (CL), Weekly Chart

Overview: While market conditions are a bit slow today, things are soon to pick up. There are several key events scheduled for tomorrow, including Nonfarm Productivity (Q3) and the NFIB Business Optimism Index (Nov.). In the event these figures come in positive, stocks are likely to continue their late-2020 rally. If so, be on the lookout for January WTI to rally above the 62% Fibonacci levels and toward $50.00.

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