U.S. West Texas Intermediate crude oil futures are trading lower on Wednesday. The market is following through to the downside, confirming yesterday’s potentially bearish closing price reversal top. This could lead to the start of a 2 to 3 day correction.
The market weakened yesterday after the hurricane premium was removed and on a possible rise in supply at the Cushing, Oklahoma futures hub.
Daily Technical Analysis
The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation and subsequent confirmation of yesterday’s closing price reversal top.
A trade through $71.40 will negate the closing price reversal top and signal a resumption of the uptrend. The market is not in a position to change the main trend to down, but we could see a 50% to 61.8% correction of the last rally over the short-run.
The main range is $63.89 to $71.40. Its retracement zone at $67.65 to $66.76 is the primary downside target.
Daily Technical Forecast
If the current downside momentum continues then look for a minimum break into the 50% level at $67.65 over the short-run. Look for a technical bounce on the first test of this level.
If $67.65 fails to hold then look for the selling to extend into the uptrending Gann angle at $67.14. This is followed by the Fibonacci level at $66.76. Since the main trend is up, a test of any of these levels could attract buyers.
If buyers return then this could create enough upside momentum to challenge a Gann angle resistance cluster at $70.39 to $70.40.