Crude Oil Price Update – In Position to Test Last Bottom Before Price Spike at $53.93

U.S. West Texas Intermediate crude oil futures fell on Monday on an easing of concerns over supply shortfalls due to tensions in the Middle East, following the September 14 attack on Saudi Arabian oil facilities. Nonetheless, the market posted a large quarterly loss on demand fears due to the escalating U.S.-China trade war.

On Monday, November WTI crude oil futures settled at $54.07, down $1.84 or -3.29%.

WTI fell 1.9% in September. For the third quarter, WTI dropped 7.5%, as concerns that the trade war between the United States and China has plunged global economic growth to its lowest levels in a decade weighed on oil demand growth.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is clearly to the downside. A trade through $53.93 will change the main trend to down.

The market is in no position to signal a resumption of the uptrend. However, today’s session begins with the market down 11 sessions from its last main top. This puts it inside the window of time for a closing price reversal bottom. While this chart pattern won’t change the trend, it could trigger the start of a 2 to 3 day counter-trend rally.

The main range is $50.48 to $63.89. The market is currently trading on the weak side of its retracement zone at $55.60 to $57.19, making the area new resistance.

Daily Swing Chart Technical Forecast

Based on Monday’s price action and the close at $54.07, the direction of the November WTI crude oil futures contract on Tuesday is likely to be determined by trader reaction to the Fibonacci level at $55.60.

Bearish Scenario

A sustained move under $55.60 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the next main bottom at $53.93. This will change the main trend to down and could even extend the selling into the next main bottom at $52.71. This price is a potential trigger point for an acceleration to the downside with the August 7 bottom at $50.48, the next major target.

Bullish Scenario

Overtaking and sustaining a move over $55.60 will indicate the return of buyers. If this is able to generate enough upside momentum then look for a rally to possibly extend into the main 50% level at $57.19. Taking out this level could shift sentiment to the upside at least temporarily.