Crude Oil Price Update – Confirmation of Closing Price Reversal Top Could Trigger Start of 2-3 Day Correction

U.S. West Texas Intermediate crude oil futures are trading lower early Thursday after posting an outside move, closing price reversal top the previous session. The chart pattern doesn’t change the main trend to down, but if confirmed, it could signal the start of a 2 to 3 day counter-trend sell-off.

On Thursday at 13:34 GMT, December WTI crude oil futures are trading $76.64, down $0.42 or -0.55%.

Oil prices fell on Wednesday after an unexpected rise in U.S. crude stocks raised concerns over demand after prices rallied to multi-year highs.

U.S. crude inventories rose by 2.3 million barrels last week, the U.S. Energy Information Administration (EIA) said, against expectations for a modest dip of 418,000 barrels. Gasoline inventories also rose, while distillate inventories were down slightly.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside with the formation of the closing price reversal top on Wednesday.

A trade through $76.48 will confirm the closing price reversal top and signal the start of a 2 to 3 day correction.

A move through $79.39 will negate the closing price reversal top and signal a resumption of the uptrend. Taking out $72.82 will change the main trend to down.

The minor range is $72.82 to $79.39. Its 50% level or pivot at $76.11 is the first downside target.

The short-term range is $69.05 to $79.39. Its retracement zone at $74.22 to $73.00 is the primary downside target area.

The main range is $61.11 to $79.39. If the main trend changes to down then look for the selling to continue into its retracement zone at $70.25 to $68.09.

Daily Swing Chart Technical Forecast

The direction of the December WTI crude oil market on Thursday is likely to be determined by trader reaction to the pivot at $76.11.

Bearish Scenario

A sustained move under $76.11 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for a possible plunge into $74.22 to $73.00.

Since the main trend is up, look for buyers on a test of $74.22 to $73.00. They are going to try to defend the main bottom at $72.82. If this price fails, then the main trend will change to down.

Bullish Scenario

A sustained move over $76.11 will signal the presence of buyers. This could trigger a rebound rally into $77.75. Overtaking this level will indicate the buying is getting stronger with $79.39 the next likely upside target.