New York: US crude oil prices could face renewed downward pressure despite trading near the upper end of this year’s range, as technical analysis points to unfilled price gaps that may draw the market lower.
Trading during the Iran war has left several gaps on the chart for West Texas Intermediate (WTI), the US crude oil benchmark. Most of these gaps have since been filled. However, at least 2 remain partly or completely open below current prices, creating potential downside targets for traders.
Technical analysis examines historical price movements to identify patterns that may indicate future market direction. One pattern is a gap, which forms when prices move sharply enough to skip a range of levels. These gaps often appear between one day’s closing price and the next trading session’s opening price.
Many analysts expect markets to return to these skipped ranges over time. This process is known as filling a gap. Although the pattern does not guarantee a future move, the remaining gaps below current oil prices suggest that downward movement could be the market’s path of least resistance.
Traders also monitor support and resistance levels when assessing price direction. Support acts as a potential floor that can slow or stop a decline, while resistance can limit further gains. Both levels may serve as targets for market participants. Gaps can also function as support or resistance depending on how prices move.
London Stock Exchange Group (LSEG) noted that the nearest unfilled gap lies between the August 28 close of $83.40 and the August 31 opening price of $84.69. With crude trading around $100, this range sits roughly $15 below current levels. A decline towards it would bring prices back into the space left by an earlier jump.
A second gap is wider and dates from the start of the Iran war. It lies between the February 27 close of $67.02 and the March 2 opening price of $75.00. Prices moved across an $8 range in a single step during the market’s initial reaction to the conflict. A fall towards this area would take crude back to levels last seen before the war began.
However, unfilled gaps are not certain to close quickly or at all. Markets can leave such gaps open for extended periods. A prolonged conflict or further disruption to oil supplies could also keep prices elevated. Even so, with crude struggling to advance near the top of its yearly range, the remaining gaps provide clear potential targets for sellers.
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