Thin holiday liquidity is keeping WTI and Brent crude boxed in ahead of the US Independence Day weekend, with the $70 level acting as the pivot for both. FXEmpire analyst Christopher Lewis reads the recent move as position squaring, and sees Brent as oversold near a $70 floor.
The $70 mark is doing the heavy lifting in crude oil right now, and neither WTI nor Brent looks likely to break decisively either way while US traders sit out the Independence Day holiday. FXEmpire's Christopher Lewis notes the world is pricing in peace in the oil markets but also covering bets heading into the three-day weekend.
WTI has traded choppily, which Lewis attributes to the $70 level sitting just above and to thin liquidity while Americans are away for the holiday. He reads most of the overnight move as probably position squaring and suggests not reading too much into it. Now that the gap has filled, he thinks it is probably only a matter of time before buyers try to push the market up toward the top of the summer range, which he calls typical behavior for this time of year.
Brent looks much the same, with Lewis describing a significant floor at $70 and the market as oversold. He expects buyers to probably look for the upside on Monday with limited success, then drift lower once a range top is found, and says he is cautious about position sizing.
A break below $70 would signal further downward pressure, perhaps sending Brent toward $67. Even so, Lewis thinks the market is overdone to the downside, just as it had been overdone to the upside before.
Source: FXEmpire
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