Crude Oil Price Update – Grinding Higher Toward Resistance

Short-covering and a weak U.S. Dollar are helping to boost August West Texas Intermediate crude oil for a fourth day. Despite the four-day counter-trend rally, the market is only grinding higher at this point as investors remain worried about the current oversupply situation.

Technical Analysis

The main trend is down according to the daily swing chart. Overcoming the previous main bottom at $44.45 will indicate the market is getting stronger. Taking out the main top at $45.28 will change the main trend to up.

The short-term range is $45.28 to $42.05. Its 50% level or pivot is $43.67. Crude oil is currently trading on the strong side of the pivot. This is giving the market a slight upside bias today. If buyers can build a support base at or above the pivot, the market will have a better chance at taking out $45.28.

A break back under the pivot will indicate that sellers are coming in to defend the downtrend.

Forecast

Based on the current price at $44.00 and the earlier price action, the direction of crude oil the rest of the session is likely to be determined by trader reaction to the price cluster at $43.78 to $43.67.

A sustained move over $43.78 will indicate the buying is getting stronger. This could trigger a surge into the next price cluster at $44.45 to $44.53. Look for resistance on the initial test of this area, but overtaking it could lead to a surge into the main top at $45.28.

A sustained move under $43.67 will signal the return of sellers. Since this is a poorly constructed rally, there is plenty of room to the downside if this price fails as support. The next major support comes in at $42.28, $42.05 and $41.98.

Look for the intraday bullish tone to continue on a sustained move over $43.78 and an intraday bearish bias to develop on a sustained move under $43.67.