Crude Oil Price Update – Looking for Choppy, Two-side Trade Today

July West Texas Intermediate Crude Oil futures are trading lower after an early rally failed to attract enough buyers to sustain the move. Bearish traders are worried about the global supply glut and whether the OPEC-led extension will be enough to trim the oversupply without deeper cuts. Bullish investors are hoping the start of the U.S. summer driving season will lead to increased demand for gasoline and crude oil.

Technical Analysis

The main trend is down according to the daily swing chart. The trend will turn up when the market trades through $52.00. A trade though $48.18 will signal a resumption of the downtrend. Despite the recent rally, the main trend never turned up. Momentum did trend higher, however.

Last Thursday’s steep sell-off changed momentum to the downside. The move also formed a potentially bearish closing price reversal top. We had a follow-through to the downside, but short-term oversold conditions encouraged profit-taking and short-covering.

Today, the market is trading inside a major retracement zone at $49.29 to $50.51. Inside this range is a short-term 50% level or pivot at $50.09.

On the downside, the intermediate retracement zone is $48.07 to $47.14. Inside this zone is a major 50% level at $47.69.

Because of the layout of the retracement levels, crude oil could become rangebound.

Forecast

Based on the current price at $49.43 and the earlier price action, the 50% level at $50.09 is resistance and support is the 50% level at $49.29.

Taking out $49.29 will indicate the presence of sellers. This could drive the market into a steep downtrending angle at $49.00.

Crossing to the weak side of the angle at $49.00 will indicate the selling is getting stronger with the next targets clustered at $48.38, $48.18 and $48.07.

Holding $49.29 will indicate that counter-trend buyers are coming in to support the market. If they can create enough upside momentum then we could see a return move into $50.09, followed by a resistance cluster at $50.50 to $50.51.