WTI Futures Fill Technical Gap

A few weeks ago, when the OPEC+ group announced their output cut on a weekend, traders reacted immediately when the market opened which sent prices higher. This led to a "gap" between the prior Friday's High price and the Sunday evening Open price. Gaps are rare for a market that trades almost non-stop from Sunday evenings until Friday afternoons. Technical analysis, which is based on statistics, does not view gaps as normal. Much like outer space abhors a vacuum, sequences of numbers tend to want to "fill" the gaps before continuing in the direction of the gap, either up or down.

Today, June WTI NYMEX futures dipped low enough to "close" the gap created a few weeks ago. While surprising given the magnitude of the gap, this reinforces the technical importance of gap theory. We would now expect to see the market return to an uptrend and, perhaps, test new highs.