Crude Oil Price Update – Buyers Could Overtake Retracement Zone. Strengthens Over $71.85, Weakens Under $70.54
U.S. West Texas Intermediate crude oil futures closed slightly better on Friday after posting a strong recovery rally from Monday’s steep sell-off. Besides relatively cheap oil prices, aggressive buyers were encouraged by expectations that supply will remain tight throughout the year. Although traders were rattled early in the week by worries over demand destruction from the surging COVID-19 Delta variant, these concerns were mysteriously downplayed throughout the week.
On Friday, September WTI crude oil futures settled at $72.07, up $0.16 or +0.22%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of a closing price reversal bottom on July 20.
A trade through $74.90 will change the main trend to up, while a move through $65.01 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The short-term range is $76.07 to $65.01. On Friday, the market crossed to the strong side of its retracement zone at $70.54 to $71.85. This zone is control the near-term direction of the market.
The next range is $74.90 to $65.01. Its 50% level at $69.90 is potential support.
The minor range is $65.01 to $72.21. Its retracement zone at $68.61 to $67.76 is another potential support area.
The major support is the long-term retracement zone at $66.35 to $64.05. This zone stopped the sell-off at $65.01 last Monday. This is a value zone.
Daily Swing Chart Technical Forecast
The direction of the September WTI crude oil futures contract early Monday is likely to be determined by trader reaction to $71.85.
A sustained move over $71.85 will indicate the presence of buyers. If this move can generate enough upside momentum then look for an acceleration to the upside. The daily chart indicates there isn’t any resistance until $74.90 to $76.07.
A sustained move under $71.85 will signal the presence of sellers. This could lead to a labored break with the first two potential support levels coming in at $70.54 and $69.96.
If $69.96 fails as support then look for a steep break into $68.61 to $67.76.