Crude Oil Price Update – Prices Firm but Vulnerable to End-of-Month Position-Squaring

September West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening and after giving all of its earlier gains. Traders are attributing the weakness to end of the month position-squaring and profit-taking.

In other news, there is a threat of U.S. sanctions against OPEC member Venezuela, a fire at Europe’s largest refinery and the announcement of an OPEC meeting in Abu Dhabi next week.

Technical Analysis

The main trend is up according to the daily swing chart. The nearest upside target is the May 25 top at $52.38. The trend will change to down on a trade through $45.40.

The main range is $52.38 to $42.27. Its retracement zone at $48.52 to $47.33 is a support area.

Due to the prolonged move up in terms of price and time, traders should watch for a closing price reversal top today. This won’t signal a change in trend, but it will indicate the selling is greater than the buying at current price levels.

Forecast

We do know that upside momentum is slowing. Last week, the market was moving up at a pace of $1.00 per day from the $45.40 bottom. This angle comes in at $50.40 today. Currently, the market is trading below this angle.

Overcoming $45.40 will put the market in an extremely strong position with the next target angle coming in at $50.97. This is the last potential resistance angle before the $52.38 main top.

A sustained move under the downtrending angle at $49.57 will indicate the presence of sellers. This could trigger an acceleration to the downside with the next target the Fibonacci level at $48.52, followed by the steep uptrending angle at $47.90.

Look for a downside bias on a sustained move under $49.57 and an upside bias on a sustained move over $50.40.