WTI crude oil experienced a slight drop at the end of the day but still gained 89 cents, closing at $63.41. This is the highest closing price since May 13. The market reacted to news about a US nuclear proposal to Iran, which limited some of the gains. Looking at the daily chart, there’s speculation about forming an inverted head-and-shoulders pattern. If this pattern’s “neckline” breaks, prices could reach as high as $73. This pattern might indicate future movements in crude oil prices.

Price Action and Technical Interest

Currently, WTI crude is showing signs of strong technical interest. The late dip, influenced by the nuclear proposal news, suggests that political factors still affect market momentum. However, closing above $63 indicates strong demand for the commodity and its options. Resistance occurred at levels not seen since mid-May, and traders often remember these previous peaks. There’s growing speculation about an inverse head-and-shoulders structure on the daily chart. Such patterns can signal market reversals, with the neckline marking a level that, if surpassed, could trigger significant buying. It’s important that this neckline aligns with past price congestion, reinforcing its significance. If the neckline breaks cleanly, a target of around $73 is possible. However, the focus should be on how prices act around these key levels. Looking ahead, we need to pay attention to volume confirmation and short-term support levels. Any pullback towards $61.50 should be monitored to see if supply increases or if it’s just a temporary shakeout. Usually, tight price movements are followed by quick expansions, and geopolitical news can often impact these shifts.

Implied Volatility and Trader Sentiment

From our perspective, implied volatility in crude options seems to be settling into a new range after a previous decrease. This implies that premiums for front-month contracts might rise again if speculative interest increases. It’s also essential to watch open interest; growing open interest near resistance tells a different story than declining volume at highs. We should be aware of how the price reacts to pullbacks—whether they are quickly bought or ignored. Analyzing volume profiles and price movements offers more context than just looking for clean patterns. It’s crucial not only to watch if the neckline breaks but also to observe how it breaks and how quickly traders accept those levels. A slow ascent through resistance rarely holds, while a fast, high-volume surge usually commands attention. We also need to consider positioning data. There’s been an increase in net long positions among managed funds. So far, there hasn’t been any drop in these positions. If prices reach $65 and maintain that level, we could see even more confidence in directional bets. Ultimately, everything depends on how buyers react around the neckline. This is where confidence can either strengthen or weaken. Create your live VT Markets account and start trading now.

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