Crude Oil Price Update – Big Challenge for Bulls on Test of $40.25 – $38.99 Retracement Zone

U.S. West Texas Intermediate crude oil futures are trading lower on Friday, pressured by fears about a slow recovery in the global economy and fuel demand due to an accelerating rise in COVID-19 infections, but remained on track for a second straight weekly gain, helped by vaccine hopes.

At 05:00 GMT, December WTI crude oil futures are trading $40.43, down $0.69 or -1.68%. For the week, the futures contract is headed for a surge of about 8%.

Energy Information Administration (EIA) data also added pressure, as crude inventories rose by 4.3 million barrels the week-ending November 6, compared with an expected fall of 913,000 barrels.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $43.06 will signal a resumption of the uptrend. A move through $33.64 will change the main trend to down.

The minor trend is also up. A trade through $37.06 will change the minor trend to down. This will shift momentum to the downside.

The short-term range is $44.33 to $33.64. Its retracement zone at $40.25 to $38.99 is potential support. This zone is also controlling the near-term direction of the market.

The minor range is $33.64 to $43.06. Its retracement zone at $38.35 to $37.24 is the next likely downside target area.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the December WTI crude oil market on Friday is likely to be determined by trader reaction to the short-term Fibonacci level at $40.25.

Bullish Scenario

A sustained move over $40.25 will indicate the presence of buyers. The first upside target is $41.61, followed by $43.06. Taking out the latter could trigger a surge into the August 26 main top at $44.33.

Bearish Scenario

A sustained move under $40.25 will signal the presence of sellers. This could trigger an acceleration into $38.99. If this fails this look for the selling to possibly extend into $38.35 to $37.24.

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