Crude Oil Price Update – Reaction to Retracement Zone at $65.81 to $66.26 Will Set This Week’s Tone

Crude oil futures are trading higher, helped by a weaker U.S. Dollar, which may be driving up foreign demand for the dollar-denominated asset. The market could also be getting support from concerns over supply due to the uncertainty over the impact of the U.S. sanctions against Iran. Gains may be limited by worries about demand and the lingering trade dispute between the United States and China.

At 1241 GMT, October WTI crude oil futures are trading $65.85, up $0.43 or +0.66%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the closing price reversal bottom on August 16 at $63.89.

A trade through $67.72 will change the main trend to up. A move through $63.89 will negate the reversal bottom and signal a resumption of the downtrend.

The short-term range is $63.89 to today’s high at $65.82. Its 50% level or pivot at $64.86 is support.

The main range is $67.72 to $63.89. Its retracement zone at $65.81 to $66.26 is currently being tested. Since the main trend is down, sellers may start to show up on a test of this area. They are going to try to form a potentially bearish secondary lower top. Aggressive counter-trend buyers, on the other hand, may try to take out this zone in an effort to increase the importance of the $63.89 main bottom and to make a run at changing the main trend to up.

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Daily Technical Forecast

Based on the current price at $65.85, the direction of the October WTI crude oil futures contract the rest of the session is likely to be determined by trader reaction to the 50% level at $65.81.

A sustained move over $65.81 will signal the presence of buyers. If this move creates enough upside momentum then look for a potential surge into the Fib level at $66.26, followed by a downtrending Gann angle at $66.47. This is another trigger point for an acceleration to the upside.

A sustained move under $65.81 will indicate the presence of sellers. This could lead to a retest of a steep uptrending Gann angle at $65.39. This angle provided support earlier in the session.

If $65.39 fails as support then look for the selling to extend into the short-term pivot at $64.86 and the next uptrending Gann angle at $64.64.