Crude Oil Price Update – In Position to Cross to Weak Side of Major 50% Level

Crude oil futures fell sharply on Friday as investors prepared for next week’s key meeting between OPEC and a few major non-OPEC producers on June 22-23 in Vienna. Sellers returned to the market after several days of counter-trend buying on reports that Saudi Arabia and Russia will announce production hikes at next week’s meeting.

August West Texas Intermediate crude oil settled at $64.85, down $1.84 or -2.84%.

Helping to limit gains last week and perhaps add to the Friday’s selling pressure were continued concerns over rising U.S. crude production.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend resumed on Friday when sellers took out the main bottom at $64.15. The new main top is $67.03. A trade through this price will change the main trend to up.

The contract range is $89.45 to $39.88. Its retracement zone is $70.51 to $64.67. This zone is controlling the longer-term direction of the market. Since June 4, WTI crude oil has been trying to build a support base at the lower or 50% level of this range at $64.67. Trader reaction to this level should set the longer-term trend of the market.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $64.85, the direction of the August WTI crude oil market on Monday is likely to be determined by trader reaction to the major 50% level at $64.67.

A sustained move over $64.67 will indicate the presence of buyers. If this creates some upside momentum, we could see a little short-covering drive the market back towards the main top at $67.03.

A sustained move under $64.67 will signal the presence of sellers. This could drive the market through last week’s low at $64.09. This price is a potential trigger point for an acceleration to the downside since the next major target is the April 16 main bottom at $61.43.

Watch the price action and read the order flow at $64.67 on Monday. Trader reaction to this price will tell us if the selling pressure is increasing or if aggressive counter-trend buyers have returned to try to prop up the market ahead of the OPEC meeting on June 22-23.