Crude Oil Price Update – Confirmation of Closing Price Reversal Top Makes $72.66 – $71.80 Next Downside Target
U.S. West Texas Intermediate crude oil futures are trading lower for a second straight session on Wednesday as investors booked profits on valuation concerns and doubts over demand. Two of the biggest worries for traders at this time are rising global COVID-19 cases and gasoline shortages in some areas.
At 03:31 GMT, December WTI crude oil futures are trading $73.84, down $1.06 or -1.42%.
Also weighing on prices was an industry report that showed U.S. crude oil, gasoline and distillate inventories rose last week.
According to the American Petroleum Institute (API), crude stocks rose by 4.1 million barrels for the week ended September 24. Gasoline inventories rose by 3.6 million barrels and distillate stocks rose by 2.5 million barrels.
On Wednesday at 14:30 GMT, the U.S. Energy Information Administration (EIA) is scheduled to release its weekly inventories report. Traders are looking for a 2.5 million barrel crude oil draw down.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the formation of a closing price reversal top on Tuesday and its subsequent confirmation earlier today.
A closing price reversal top is not a change in trend, but it could trigger a 2 to 3 day correction. The main trend will change to down on a trade through $69.05.
The minor range is $69.05 to $76.26. Its retracement zone at $72.66 to $71.80 is the primary downside target. Since the main trend is up, buyers are likely to come in on a test of this area.
Daily Swing Chart Technical Forecast
The direction of the December WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to $75.08.
A sustained move under $75.08 will indicate the presence of sellers. Taking out $73.86 earlier in the session confirmed Tuesday’s closing price reversal top. This should lead to a 2 to 3 day correction with $72.66 to $71.80 the next likely downside target.
Since the trend is up, look for buyers on a test of $72.66 to $71.80. They are going to try to produce a secondary higher bottom.
Overtaking and sustaining a move over $75.08 will signal the presence of buyers. If this move creates enough upside momentum, we could see a test of $76.26.
Taking out $76.26 will negate the closing price reversal top and signal a resumption of the uptrend. This could trigger a surge into the next main top at $76.98.
Side Notes: Longer-term traders should watch the price action and read the order flow on a test of $73.61. Breaking under this level will put crude oil lower for the week, setting up the possibility of a potentially bearish weekly closing price reversal top.