Crude Oil Price Update – Could Retrace into 200-Day Moving Average at $60.59Based on the early price action, the direction of the July WTI crude oil market the rest of the session is likely to be determined by trader reaction to the major 50% level at $59.70.
U.S. West Texas Intermediate crude oil futures are trading higher on Tuesday, shortly after the regular session opening. The price action suggests that the market is still garnering support from the OPEC-led support cuts and the U.S. sanctions against Iran and Venezuela.
The price action is also supporting the notion that the May 23 sell-off was fueled by sell stops rather than aggressive short-selling. If this is the case then prices could rally back into those former support levels which have been identified as a long-term 50% level and a 200-day moving average level.
At 13:16 GMT, July WTI crude oil is trading at $59.54, up $0.92 or +1.57%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through $57.33 will signal a resumption of the downtrend. The main trend will change to up on a move through $63.96. This is highly unlikely today, however, but there is still room for a normal 50% to 61.8% retracement.
The major 50% level is at $59.70. This zone could act like resistance on the first test of this level.
The short-term range is $63.96 to $57.33. Its retracement zone at $60.65 to $61.43 is the primary upside target and potential resistance area. Since the main trend is down, look for sellers on the first test of this area.
On the downside, the major support is a 50% level at $55.32.
Daily Technical Forecast
Based on the early price action, the direction of the July WTI crude oil market the rest of the session is likely to be determined by trader reaction to the major 50% level at $59.70.
A sustained move under $59.70 will indicate the presence of sellers. If this move creates enough downside momentum then we could see a drive into an uptrending Gann angle at $57.46, followed by last week’s low at $57.33.
A sustained move over $59.70 will signal the presence of buyers. This could lead to a labored rally with potential targets a downtrending Gann angle at $60.19, the 200-day moving average at $60.59 and a short-term 50% level at $60.65.