Crude Oil Price Update – Approaching Major Retracement Zone at $62.08 to $61.02

May West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening. Sellers hit the market after China announced additional sanctions against the United States. This news helped spread fear of a possible trade war that could lead to slower global economic growth.

Yesterday’s American Petroleum Institute’s weekly inventories report showed a surprise drawdown. Today’s U.S. Energy Information Administration’s weekly inventories report is expected to show a 1.4 million barrel build.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out $62.80. The next potential downside target is the March 14 bottom at $60.18. The market is down six days from the last main top. On Thursday, crude oil will be in the window of time for a potentially bullish closing price reversal bottom.

The main range is $60.18 to $66.55. Its retracement zone is $63.37 to $62.61. The market is currently straddling this zone. Trader reaction to this zone could determine the near-term direction of the market.

The major retracement zone is $62.08 to $61.02. Since this is a long-term zone, buyers could come in on a test of this area.

Daily Technical Forecast

Based on the early trade, the direction of the crude oil market today is likely to be determined by trader reaction to the main Fibonacci level at $62.61.

A sustained move under $62.61 will indicate the presence of sellers. This could trigger a further break into the major 50% level at $62.08, followed by an uptrending Gann angle at $61.93. This is a possible trigger point for an acceleration into a support cluster at $61.06 to $61.02.

A sustained move over $62.61 will signal the presence of buyers. The daily chart indicates there is room to the upside with the main 50% level at $63.37 the first target, followed by a downtrending Gann angle at $63.55.

The trigger point for an upside breakout is an uptrending Gann angle at $63.68.