Crude Oil Price Update – Best Downside Target, Value Zone is $70.40 to $70.10

Stock market volatility and rising U.S. inventories are helping to put pressure on U.S. West Texas Intermediate crude oil futures shortly before the regular session opening. Later today at 1430 GMT, the U.S. Energy Information Administration will release its weekly inventories data. It is expected to show a 2.3 million barrel increase. However, it could be higher since the American Petroleum Institute’s report came in well above forecasts.

At 1138 GMT, December WTI Crude Oil futures are trading $71.76, down $1.27 or -1.75%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $67.74 will change the main trend to down. A move through $76.72 will signal a resumption of the uptrend.

The minor trend is down. This move shifted momentum to the downside. A trade through $75.16 will change the minor trend to up and signal a shift in investor sentiment to up.

Two retracement zone are rapidly coming into play due to the sell-off. The first 50% to 61.8% zone comes in at $71.61 to $70.40. The second zone is $70.10 to $68.54. Since the main trend is up, buyers could come in on a test of these zones.

Combining the two retracement zones makes $70.40 to $70.10 the best value zone.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the December WTI Crude Oil futures contract is likely to be determined by trader reaction to the 50% level at $71.61.

A sustained move over $71.61 will indicate the presence of buyers. This could trigger a strong intraday rally if the EIA report is bullish.

A sustained move under $71.61 will signal the presence of sellers. This could trigger an acceleration to the downside with the next major target zone $70.40 to $70.10. This won’t change the trend so watch for new buyers to step in on a test of this value area.