Crude Oil Price Update – Break Under $48.52 will Lead to Range-bound Trade

September West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening. Barring any surprise news, it looks as if we’re headed towards a sideways trade.

U.S. demand has been rising, but OPEC production has been increasing. Hedgers are coming in at $50.00, but hedge funds are long. This tells me we’re likely to sit in a range.

Technical Analysis

The main trend is up according to the daily swing chart. However, the closing price reversal top on August 1 has slowed down the upside momentum.

A trade through $50.43 will negate the closing price reversal top and signal a resumption of the uptrend.

A trade through $48.37 will confirm the closing price reversal top.

The main range is $52.38 to $42.27. Its retracement zone at $48.52 to $47.33 is support.

The short-term is $45.40 to $50.53. Its retracement zone at $47.92 to $47.32 is the primary downside target.

Forecast

Based on the current price at $48.91 and the earlier price action, the direction of the market is going to be determined by trader reaction to the Fib level at $48.52.

A sustained move over $48.52 will indicate the presence of buyers. This could drive the market into a downtrending angle at $49.32.

Overtaking $43.32 will indicate the buying is getting stronger with an uptrending angle at $49.90 the next target. Crossing to the strong side of this angle will put the market in a bullish position.

A sustained move under $48.52 will signal the presence of sellers. This could trigger a break into the short-term 50% level at $47.92, followed by an uptrending angle at $47.65 and a Fibonacci level at $47.32.

I’m expecting crude oil to break into $48.52 to $47.32 over the short-term and sit there for a while or until the next major news event hits the market.