Crude Oil Price Update – Gap Opening Holding but Needs to Overtake $52.78 to Sustain Rally

Based on the limited price action and the current price at $52.56, the direction into the close on Thursday is likely to be determined by trader reaction to the Fibonacci level at $52.78.
James Hyerczyk

U.S. West Texas Intermediate crude oil futures are trading higher at the mid-session after gapping yesterday’s close on the opening. After that aggressive move, however, there hasn’t been much of a follow-through rally.

After getting crushed on Wednesday after the U.S. Energy Information Administration (EIA) reported an expected inventories build, the market opened higher today on reports that OPEC was considering cutting production to meet lower demand needs.

At 16:33 GMT, September WTI crude oil futures are trading $52.56, up $1.47 or +2.90%.

Daily September WTI Crude Oil

Daily Technical Analysis

The main trend is down according to the daily swing chart, but the market is trading inside yesterday’s range, suggesting investor indecision and impending volatility. A trade through $50.52 will signal a resumption of the downtrend.

The market isn’t close to changing the main trend to up, and all bullish investors can hope for is a closing price reversal bottom that could shift momentum to the upside.

The main range is $44.66 to $65.92. Its retracement zone at $52.78 to $55.29 is controlling the near-term direction of the market. It’s currently acting like resistance.

Daily Technical Forecast

Based on the limited price action and the current price at $52.56, the direction into the close on Thursday is likely to be determined by trader reaction to the Fibonacci level at $52.78.

Bearish Scenario

A sustained move under $52.78 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into yesterday’s low at $50.52. If this low fails then look for a break into the uptrending Gann angle at $49.50.

Bullish Scenario

A sustained move over $52.78 will signal the presence of buyers. If this move generates enough upside momentum then look for a surge into the uptrending Gann angle at $54.35. Overcoming this angle will likely lead to a test of the 50% level at $55.29.

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