Crude Oil Price Update – Headed Lower Unless Reversal Bottom is Confirmed With Strong Volume

Based on the early trade, the direction of the September WTI crude oil market will be determined by trader reaction to $68.01. The main trend is down according to the daily swing chart. However, yesterday’s closing price reversal bottom may be signaling a shift in momentum to the upside. A trade through $68.01 will confirm the chart pattern. This could fuel the start of a 2 to 3 day counter-trend rally with a potential target zone of $69.64 to $70.42.
James Hyerczyk
Crude Oil
Crude Oil

U.S. West Texas Intermediate crude oil futures are trading lower early Thursday, following yesterday’s potentially bullish closing price reversal bottom. There was no follow-through to the upside so the chart pattern was not confirmed. The market is currently trading inside yesterday’s range which suggests investor indecision and impending volatility.

At 0713 GMT, September WTI crude oil is trading $67.47, down $0.28 or -0.43%.

The catalyst behind yesterday’s reversal bottom was inventory data from the U.S. Energy Information Administration which showed U.S. gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose from the week before and was up from a year earlier.

Limiting gains, however, was a reported surge in U.S. oil production to a record 11 million barrels per day (bpd). Additionally, U.S. crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.

Daily September WTI Crude Oil

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Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, yesterday’s closing price reversal bottom may be signaling a shift in momentum to the upside. A trade through $68.01 will confirm the chart pattern. This could fuel the start of a 2 to 3 day counter-trend rally with a potential target zone of $69.64 to $70.42.

A trade through $66.29 will negate the reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through $72.98.

The minor trend is also down. A move through $70.60 will change the minor trend to up.

The main range is $62.99 to $72.98. The market is currently testing its retracement zone at $67.99 to $66.81. This zone is controlling the direction of the market.

The short-term range is $70.60 $66.29. Its 50% level or pivot at $68.45 is the next target.

The intermediate range is $72.98 to $66.29. If the reversal bottom gains traction then look for a possible rally into its retracement zone at $69.64 to $70.42.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the September WTI crude oil market will be determined by trader reaction to $68.01.

A sustained move under $68.01 will indicate the presence of sellers. This could drive the market into the Fibonacci level at $66.81, followed by yesterday’s low at $66.29. Taking out this low could trigger an acceleration to the downside. The daily chart indicates there is plenty of room to the downside with $62.99 the next major target.

A sustained move over $68.01 will signal the presence of buyers. This will also put the market on the strong side of the 50% level at $67.99. Look for the rally to strengthen over $68.45. This could trigger an acceleration to the upside with $69.64 the minimum upside target.

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