Crude Oil Price Update – Buyers Trying to Build Support at $71.61 to $70.40 Retracement ZoneBased on the early price action, the direction of the December WTI crude oil futures contract the rest of the session is likely to be determined by trader reaction to the 50% level at $71.61.
Crude oil futures are trading higher on Monday as geopolitical concerns over the disappearance of a popular Saudi journalist continue to rattle traders while raising issues over supply. Gains may be limited, however, over demand issues which were raised last week. Traders are also saying that the market was being underpinned by the news that South Korea did not import any oil from Iran in September for the first time in six years.
At 1300 GMT, December West Texas Intermediate crude oil is trading $71.68, up $0.50 or +0.70%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $70.37 will signal a resumption of the downside momentum.
The minor trend is also down. This move led to a shift in momentum to down.
The main range is $66.50 to $76.72. Its retracement zone is $71.61 to $70.40. This zone provided support last week when buyers came in to stop the selling at $70.37. Today, the market is straddling the upper or 50% level at $71.61.
Holding above $71.61 will give the market an upside bias. A break below $70.37 will give crude oil a downside bias.
The short-term range is $76.72 to $70.37. Its retracement zone at $73.55 to $74.29 is the primary upside target.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the December WTI crude oil futures contract the rest of the session 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. If this move can gain traction with rising volume then we could see an eventually extension of the rally into the short-term retracement zone at $73.55 to $74.29. This is a major area because aggressive counter-trend sellers are going to try to form a secondary higher top, while trend-trading buyers are going to try to drive the market through this area in an effort to make $70.37 a new higher bottom.
A sustained move under $71.61 will signal the presence of sellers. If the selling is light then look for a short-term move into $70.40. The market could sit in a zone after that.
If the selling is strong enough to take out $70.37 then look out to the downside because the next major support doesn’t come in until $67.74.