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Crude Oil Price Update – In Position to Challenge Major Retracement Zone at $37.50 to $41.56

By:
James Hyerczyk
Updated: Jul 20, 2020, 14:54 UTC

The direction of the August WTI crude oil market into the close is likely to be determined by trader reaction to the main 50% level at $37.50.

WTI and Brent Crude Oil

U.S. West Texas Intermediate crude oil futures are inching higher late in the session after recovering all of its earlier losses. The move was mostly generated by intraday short-covering related to a dramatic turnaround in U.S. equity markets.

At 17:52 GMT, August WTI crude oil is trading $37.03, up $0.52 or +1.42%.

Earlier in the session prices fell nearly 2% as new coronavirus infections hit China, Japan and the United States, adding to concerns that a resurgence of the virus could weigh on the recovery of fuel demand.

“The recovery in oil demand is already set to be a lengthy process, and a fresh wave of cases will certainly raise worries that a recovery in demand may take even longer than initially thought,” ING’s head of commodities strategy Warren Patterson said.

Daily August WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $40.69 will signal a resumption of the uptrend. The main trend will change to down on a move through $31.63.

The main range is $54.71 to $20.28. Its retracement zone at $37.50 to $41.56 is controlling the longer-term direction of the market. This zone stopped the rally last week at $40.69.

The minor range is $31.63 to $40.69. Its retracement zone at $36.16 to $35.09 provided support on Friday and earlier today.

The short-term range is $20.28 to $40.69. Its retracement zone at $30.49 to $28.08 is a major downside target and potential support area.

Short-Term Outlook

Based on the earlier price action and the current price at $37.03, the direction of the August WTI crude oil market into the close is likely to be determined by trader reaction to the main 50% level at $37.50.

Bullish Scenario

A sustained move over $37.50 will indicate the buying is getting stronger. This could trigger a surge to the upside. The nearest target prices are $40.69 to $41.56.

Bearish Scenario

A sustained move under $37.50 will signal the presence of sellers. This could trigger a labored break into $36.16, $35.09 and $34.66.

Taking out $34.66 will indicate the selling pressure is getting stronger. This could trigger an acceleration to the downside with the next potential targets coming in at $31.63 and $30.49.

For a look at all of today’s economic events, check out our economic calendar.

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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