Mapping the Market: Mind the gap in US oil as Iran tensions escalate
XLE•Chart levels to watch
- WTI up over 53% since its July 2 low of $67.04
- May 19-20 gap above $104
- A push higher targets $111-$113; reversal from the gap points toward $102, $100 and then $93.50
Gap on the chart and nearby targets
A gap is an empty space on a price chart where no trading has taken place, which in this case occurred between the May 19 close of $107.77 and the opening price of $104.12 on May 20. Technical analysts often view gaps as a constraint on prices until they are filled, after which the market is freer to choose a new direction.
After the gap area, the $111-$113 zone is a logical target since it was marked by price congestion amid a series of daily closes there.
However, if oil comes off the boil after filling the gap, a retreat below $102 and $100 would indicate the direction has turned lower, with $93.50, the high on July 23, being the next objective.
US oil rally sets up chart showdown
NEW YORK, Sept. 11 (Reuters) - The price of U.S. oil has been on a scorching rally for the last two months — including a surge of nearly 7% on Thursday as U.S.-Iran tensions escalated — setting up a showdown on the charts to decide which way it goes next.
Since bottoming at $67.04 on July 2, the price of West Texas Intermediate CLc1 — the benchmark for U.S. crude oil — has risen more than 53%, according to data supplied by LSEG. That jump has brought into play a gap in the price chart that opened nearly four months ago.
