Crude Oil Price Update – Market Testing Major Retracement Zone at $65.45 to $62.79 but No Sign of Bottoming

December West Texas Intermediate crude oil futures finished lower on Wednesday, putting an end to its worst monthly performance since July 2016. The market was pressured by another bearish U.S. Energy Information Administration weekly inventories report. The EIA report showed another jump in crude stockpiles. However, losses were likely dampened by strong demand for gasoline.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The market is in no position to change the trend to up. At this point, due to a prolonged move down in terms of price and time, it seems the only chart pattern that can stop the sell-off is a dramatic closing price reversal bottom.

If the selling pressure continues then look for a potential acceleration into the next main bottom at $63.48.

The main range is $54.18 to $76.72. The market is currently testing its retracement zone at $65.45 to $62.79. This zone has to hold or prices could collapse further.

The short term range is $63.48 to $76.72. Its retracement zone at $68.54 to $70.10 is the nearest upside target. This zone is resistance.

Daily Swing Chart Technical Forecast

Based on Wednesday’s price action, the direction of the December WTI crude oil futures contract on Thursday is likely to be determined by trader reaction to the main 50% level at $65.45.

A sustained move under $65.45 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the August 16 main bottom at $63.48, followed by the main Fibonacci level at $62.79.

Overtaking and sustaining a rally over $65.45 will signal the return of buyers. The first rally is likely to be short-covering so we don’t expect much of a retracement. However, if the move does gain traction then $68.54 will become the first potential upside target.