Crude Oil Price Update – Hovering Above Retracement Zone at $65.45 to $62.79

U.S. West Texas Intermediate Crude Oil futures are trading lower early Thursday. Buyers are being a little cautious in response to weaker Asian stock markets in light of the steep decline in U.S. equity markets on Wednesday. Traders are a little jumpy ahead of U.S. sanctions against Iran’s crude exports, which start on November 4, but the weakness in the equity markets is signaling perhaps bigger problems in the global economy and this has oil traders worried about future demand.

At 0431 GMT, December WTI Crude Oil futures are trading $66.31, down $0.51 or -0.78%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The market is in no position to change the main trend to up, but it is in the window of time for a closing price reversal bottom. This is probably the only major chart pattern that could shift momentum to up.

Regaining the former bottom at $66.50 will indicate that sellers have begun lightening up on the downside. If the selling pressure continues through $65.74 then the next potential targets are main bottoms at $63.48 and $62.32.

One main range that we are looking at is $54.18 from December 7, 2017 to $76.72 on October 3, 2018. Its retracement zone is $65.45 to $62.79. Testing this zone puts the market back inside its December to May range which is where prices were before the sanctions against Iran were announced.

Daily Swing Chart Technical Forecast

With the market action being driven this week by stock market volatility and rising U.S. production, it’s hard to find any news that will be supportive.

This week’s low is $65.74. Holding this level may be an indication that the worst of the selling is over. However, I think the market has to recover the former bottom at $66.50 in order to strengthen. We may not see actual buyers come in over this level, but we could see some pretty strong short-covering.

If $65.74 is taken out with conviction then look for a drive into the 50% level at $65.45. We could see a technical bounce on the first test of this level, but if it fails then look for another potential spike to the downside with new targets coming in at $63.48, $62.79 and $62.32.