Crude Oil Price Update – Pivot at $43.67 Controlling the Short-Term Price Action

August West Texas Intermediate crude oil futures are trading higher shortly before the regular session opening. Short-covering and profit-taking is helping the market to recover some of this week’s losses, but the market is still in a position to close the week lower as well as the month. Additionally, crude oil is likely to finish the quarter with its worst first-half decline in almost two decades.

The catalyst behind the sell-off this week was concern over the global supply glut and OPEC’s inability to reduce production, trim supply and stabilize prices.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through $42.05 will signal a resumption of the downtrend. Taking out the swing top at $45.28 will turn the main trend to up.

The short-term range is $45.28 to $42.05. Its 50% level or pivot is $43.67. Holding below this level will help maintain the market’s downside bias.

The market is also trading between a pair of former long-term bottoms at $44.45 and $42.05. Both are capable of becoming resistance and support respectively.

Forecast

Based on the current price at $42.82 and the earlier price action, the direction of the crude oil market today is likely to be determined by trader reaction to the downtrending angle at $43.28.

A sustained move under $43.28 will signal the presence of sellers. This could drive the market into the next downtrending angle at $42.22. This is followed by this week’s low at $42.05 and the main bottom at $41.98.

If $41.98 fails as support then look for the break into a steep downtrending angle at $41.28. Crossing to the weak side of this angle will put crude oil in a bearish position.

Overcoming the angle at $43.28 will indicate the presence of buyers. This could trigger a fast move into the pivot at $43.67. Overtaking the pivot will likely trigger an acceleration into the angle at $44.28 and the former bottom at $44.45. These are the last potential resistance levels before the $45.28 main top.