Crude Oil Price Update – Selling to Continue with Near-Term Target Zone at $33.52 to $31.10

U.S. West Texas Intermediate crude oil futures fell more than 8%, and international-benchmark Brent crude dropped below $40 a barrel for the first time since June in reaction to a price cut buy Saudi Arabia and another flareup of coronavirus cases around the world that threaten renewed demand destruction.

At 19:05 GMT, October WTI crude oil is trading $37.00, down $2.77 or -6.97%. Earlier in the session, the market reached a low of $36.13, a price last touched on June 15.

Daily Technical Analysis

The main trend is down according to the daily swing chart. On Tuesday, sellers took out main bottoms at $39.00 and $37.56 with sell stops helping to accelerate the downside pressure. If the downside momentum then look for a test of the June 12 bottom at $35.25. This is followed by the May 28 main bottom at $32.66.

The short-term range is $32.66 to $43.78. On Tuesday, the market straddled its retracement zone at $38.22 to $36.91. Trader reaction to this zone should determine the next short-term move.

The main range is $23.26 to $43.78. Its retracement zone at $33.52 to $31.10 is the primary downside target and value area. It represents 50% to 61.8% of the entire April to August rally so a pullback into this area would offer a great opportunity for new buyers to enter the market in anticipation of an eventual recovery in the global economy.

Short-Term Outlook

October WTI crude oil found some support on Tuesday at a support cluster formed by a Fibonacci level at $36.91 and a steep downtrending Gann angle at $36.58.

Crossing to the weak side of the Gann angle at $36.58 could trigger another acceleration to the downside with the main 50% level at $33.52 the next target, following closely by an uptrending Gann angle at $32.96.

Holding $36.91 could indicate that this round of selling is over. This could trigger a short-covering rally with the 50% level at $38.22 the next potential upside target. This is followed by a downtrending Gann angle at $40.18.

Since the main trend is down, look for new shorts to come in on rallies into resistance. These levels are $38.22 and $40.18.

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