Crude Oil Price Update – Retracement Zone at $59.58 – $57.64 Controlling Near-Term Direction

U.S. West Texas Intermediate crude oil futures are trading lower early Monday on reports that the giant container ship that has been clogging the Suez Canal and blocking global trade passage for nearly a week, had finally moved.

The stranded container ship Ever Given has almost been completely floated and will be inspected before it is moved, a shipping source with knowledge of the matter told Reuters on Monday.

At 08:09 GMT, May WTI crude oil futures are trading $60.33, down $0.64 or -1.05%.

Prices could continue their plunge that was interrupted when the ship news hit the market early last week. The biggest concern for traders is a slowdown in demand recovery due to the coronavirus-related lockdowns in Europe.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $57.25 will signal a resumption of the downtrend. The main trend will change to up on a move through $66.44.

The main range is $51.37 to $67.79. The market found support inside its retracement zone at $59.58 to $57.64. This zone is controlling the near-term direction of the market.

The minor range is $66.44 to $57.25. Its 50% level at $61.85 is the first resistance.

The short-term range is $67.79 to $57.25. Its retracement zone at $62.52 to $63.76 will be the primary upside target if the counter-trend rally continues.

Daily Swing Chart Technical Forecast

The direction of the May WTI crude oil market on Monday is likely to be determined by trader reaction to the 50% level at $59.58.

Bullish Scenario

A sustained move over $59.58 will indicate the presence of buyers. If this creates enough upside momentum then look for the counter-trend rally to possibly extend into a pair of 50% levels at $61.85 and $62.52. Since the main trend is down, sellers could return on a test of these levels.

Bearish Scenario

A sustained move under $59.58 will signal the presence of sellers. This could trigger an acceleration into $57.64, followed closely by $57.25 and a main bottom at $57.06. Taking out this level with conviction could lead to an even steeper plunge with $51.37 the next major downside target.