Crude Oil Price Update – Set-up for Test of Short-Term Retracement Zone at $69.13 to $69.66

U.S. West Texas Intermediate crude oil futures are being underpinned by concerns over the tight supply situation, a weaker U.S. Dollar, which is supporting increased foreign demand and firmer U.S. equity indexes.

At 1256 GMT, October WTI crude oil is trading $67.89, up $0.14 or +0.21%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $71.40 will signal a resumption of the uptrend. A move through $63.89 will change the main trend to down.

The minor trend is also up. A new minor bottom was formed at $66.86. A trade through this level will change the minor trend to down and shift momentum to the downside.

The main range is $63.89 to $71.40. Its retracement zone at $67.65 to $66.76 is support. This zone stopped the selling at $66.86 on September 7.

The minor range is $71.40 to $66.86. Its retracement zone at $69.13 to $69.66 is the primary upside target. This zone is very important to the structure of the market. Aggressive short-sellers could come in on a test of this zone in an effort to form a secondary lower top, or buyers could take it out, making $66.86 a new main bottom.

Daily Technical Forecast

Based on the early price action, the direction of the October WTI crude oil market is likely to be determined by trader reaction to the uptrending Gann angle at $67.89.

A sustained move over $67.89 will indicate the presence of buyers. If this move creates enough upside momentum then look for a potential rally into the 50% level at $69.13, followed by a downtrending Gann angle at $69.40. Watch for aggressive counter-trend sellers on the first test of this area.

A sustained move under $67.89 will signal the presence of sellers. This could lead to a quick test of the 50% level at $67.65. Crossing to the weak side of a steep downtrending Gann angle at $67.40 will put crude oil in a position to challenge the minor bottom at $66.86, followed by the Fib level at $66.76.

Traders are likely to play the two retracement zones at $67.65 to $66.76 and $69.13 to $69.66 over the near-term.