Crude Oil Price Update – Starts Session in Window of Time for Reversal Top

U.S. West Texas Intermediate crude oil futures are trading higher shortly before the regular session opening. Volume is extremely low ahead of Wednesday’s U.S. Fourth of July holiday so be careful buying strength or selling weakness. Today is an easy day to get trapped on the wrong side of the market.

At 1155 GMT, August WTI crude oil futures are trading $74.83, up $0.89 or +1.20%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out Friday’s high at $74.46.

The market is up 11 sessions from its last main bottom so it begins today’s session in the window of time for a potentially bearish closing price reversal top. Since we’ve already had a higher-high than yesterday, the importance of yesterday’s close at $73.94 has been raised.

The minor trend is also up. A trade through $72.51 will change the minor trend to down. This will also shift momentum to the downside.

The major support is the long-term Fibonacci level at $70.51.

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Daily Technical Forecast

Based on the early price action, the direction of the August WTI crude oil futures contract is likely to be determined by trader reaction to the steep uptrending Gann angle at $74.40. This angle is moving up at a rate of $1.00 per day from the $63.40 main bottom.

A sustained move over $74.40 will indicate the presence of buyers. The daily chart is wide open to the upside with the next major targets the November 21, 2014, main top at $79.72 and November 3, 2014, main top at $81.09. However, it is highly unlikely that these levels will be tested today.

A sustained move under $74.40 will signal the presence of sellers. This could trigger a break into yesterday’s close at $73.94.

Taking out $73.94 will turn the market lower for the session and put crude oil in a position to form a potentially bearish closing price reversal bottom. This won’t change the main trend to down, but it could lead to a 2 to 3 correction.

Taking out $72.51 will indicate the selling is getting stronger. This will also change the minor trend to down and signal a shift in momentum to the downside.

Basically, look for a bullish tone today over $74.40 and a bearish tone to develop under $73.94.