Based on the early price action and the current price at $55.03, the direction of the October WTI crude oil futures contract into Friday’s close is likely to be determined by trader reaction to a pair of uptrending Gann angles at $54.96 and $54.75.
After posting an inside move for most of the session on Friday, U.S. West Texas Intermediate crude oil futures plunged at the mid-session. The price action demonstrates just how fragile this market is despite optimism over U.S.-China trade relations. Helping to prop up prices this week were bigger-than-expected draw downs in U.S. inventories, a sign that the OPEC-led production cuts are helping to reduce U.S. stockpiles. Traders are also saying that the hurricane headed toward the East Coast of Florida could dampen demand.
At 17:31 GMT, October WTI crude oil futures are trading $55.03, down $1.68 or -2.94%.
The main trend is down according to the daily swing chart. A trade through $57.13 will change the main trend to up. A move through $52.96 will signal a resumption of the downtrend.
Today’s price action made $56.89 a new minor top. Taking out this level will change the minor trend to up. This will also shift momentum to the upside.
The main range is $60.93 to $50.50. Its retracement zone at $55.72 to $56.95 is controlling the near-term direction of the market. The upper level of this range stopped rallies at $57.40, $57.13 and $56.89.
The short-term range is $50.50 to $57.40. Its retracement zone at $53.92 to $53.11 is support. The lower level of this range stopped the selling at $52.86 on August 26.
Based on the early price action and the current price at $55.03, the direction of the October WTI crude oil futures contract into Friday’s close is likely to be determined by trader reaction to a pair of uptrending Gann angles at $54.96 and $54.75.
A sustained move over $54.96 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally back into the main 50% level at $55.72. Overcoming this level will indicate the buying is getting stronger.
A failure to hold $54.96 will signal weakness. Crossing to the weak side of the uptrending Gann angle at $54.75 will signal the presence of sellers. This could trigger a steep break into a potential support cluster at $53.96 to $53.92. Taking out $53.92 could extend the selling into the next uptrending Gann angle at $53.46, followed by $53.11 then $52.96.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.