Crude Oil Price Update – Major Uptrending Gann Angle Support at $72.40

U.S. West Texas Intermediate crude oil futures are trading slightly lower early Friday, but is still hovering near a three-and-a-half year high reached on Thursday. The market is currently being underpinned by supply issues including concerns over a Canadian production outage.

At 0718 GMT, August WTI crude oil futures are trading $73.22, down $0.23 or -0.30%.

Today’s early price action may be related to profit-taking. Some traders are saying this week’s huge rally may have blown out the shorts while exhausting the bulls.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The market is in no position to change the trend to down, but it is in the window of time for a potentially bearish closing price reversal top. The time is right, now all we need is a higher-high, lower-close.

A break back under the previous main top at $72.70 will also be a sign of weakness. This move could trap bullish investors who bought the breakout over this level earlier in the week. It will also indicate the selling is greater than the buying at current price levels, but not necessarily the start of a downtrend.

Daily Technical Forecast

Based on the early trade, the direction of the August WTI crude oil futures contract is likely to be determined by trader reaction to a steep uptrending Gann angle at $72.40.

A sustained move over $72.40 will indicate the presence of buyers. This angle, moving up at a rate of $1.00 per day from the $63.40 main bottom, has guided the crude oil market higher since June 18, or 9 trading sessions.

Since the main trend is up, buyers could come in on a test of $72.40.

A sustained move under $72.40 will signal the presence of sellers. If selling volume increases on the move then look for a possible acceleration to the downside with a major Fibonacci level at $70.51 the next likely target. Once again, don’t be surprised by a technical bounce on a test of this level.

Look for an acceleration to downside if $70.51 fails as support.