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Crude Oil Price Update – Downside Momentum Should Lead to Test of $51.05 to $50.67

By:
James Hyerczyk
Updated: Oct 19, 2017, 12:22 UTC

December West Texas Intermediate Crude Oil futures are trading lower shortly before the cash market opening. Traders are blaming profit-taking for the

Crude Oil

December West Texas Intermediate Crude Oil futures are trading lower shortly before the cash market opening. Traders are blaming profit-taking for the selling pressure. This may be true, but I think the lack of commitment by buyers may also have something to do with the weakness.

The fundamentals were stacked for a breakout to the upside, but professional investors wouldn’t bite on the news, leaving it up to the speculators to spike the markets higher. This wasn’t enough to sustain the rally. It may also be an indication that the professionals would rather by a pullback into support rather than strength.

West Texas Intermediate Crude Oil
Daily December West Texas Intermediate Crude Oil

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, the new main top at $52.65 is also a secondary lower top which indicates the selling may be greater than the buying at current price levels. A trade through $52.65 will change the main trend to up. This could lead to a test of another main top at $53.11. This is a strong breakout level.

The main range is $49.44 to $52.65. Its retracement zone a t 51.05 to $50.67 is the primary downside target. Since the main trend is up, buyers are likely to show up on a test of this zone.

Another downside target is the major retracement zone at $50.61 to $50.02. The combination of the two retracement zones makes $50.67 to $50.61 the best support area.

Daily Forecast

Based on the current price at $51.57 and the earlier price action, the direction of the crude oil market is likely to be determined by trader reaction to the uptrending angle at $51.69.

A sustained move under $51.69 will signal the presence of sellers. If this move attracts enough selling pressure, we could see a move into the 50% level at $51.05. If this price fails then look for the selling to extend into a support cluster at $50.67, $50.61 and $50.67.

Overtaking and sustaining a rally over $51.69 could trigger a rally into a downtrending angle at $52.17. This is also a trigger point for an acceleration into $52.64 then $50.65. These are the last two potential resistance levels before the main top at $53.11.

Basically, look for an upside bias to develop on a sustained move over $51.69 and for a downside bias on a sustained move under this angle.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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