Crude Oil Price Update – Strengthens Over $54.93, Weakens Under $54.46

After hovering near a one and two week high for most of the session on Friday, U.S. West Texas Intermediate crude oil futures plunged at mid-session, nearly wiping out all of the week’s gains. Traders said the move was likely related to concerns over lower demand for gasoline as forecasts called for Hurricane Dorian to hit the East Coast of Florida. Continuing to underpin prices were a dramatic drop in U.S. crude oil inventory and renewed optimism over U.S.-China trade relations.

On Friday, October WTI crude oil settled at $55.10, down $1.61 or -2.84%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $57.13 will change the main trend to up. A move through $57.40 will reaffirm the change in trend. A move through $52.96 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $56.89 will change the minor trend to up. This will also set up the market for a change of the main trend.

The main range is $60.93 to $50.50. Its retracement zone at $55.72 to $56.95 is resistance. It stopped rally in August at $56.89, $57.13 and $57.40.

The short-term range is $52.96 to $56.89. Its retracement zone at $54.93 to $54.46 provided support on Friday, stopping the selling at $54.55.

The intermediate range is $50.50 to $57.40. Its retracement zone at $53.95 to 54.14 is the last major support area before the $50.50 main bottom. It stopped sellers at $52.96 on August 26.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $55.10, the direction of the October WTI crude oil futures contract on Tuesday is likely to be determined by trader reaction to the short-term 50% level at $54.93.

Bullish Scenario

A sustained move over $54.93 will indicate the presence of buyers. If this move generates enough upside momentum then look for a move into the main 50% level at $55.72. Overcoming this level with strong buying can extend the rally into $56.89 to $56.95.

Bearish Scenario

A sustained move under $54.93 will signal the presence of sellers. The first target is the short-term Fibonacci level at $54.46. If it fails then look for the selling to extend into the intermediate 50% level at $53.95, followed by the intermediate Fibonacci level at $53.14 and the main bottom at $52.96.

Taking out $52.96 could trigger an acceleration to the downside with the August 7 bottom at $50.50 the next potential downside target.

Overview

Basically, look for an upside bias to develop on a sustained move over $54.93, and for a downside bias to develop on a sustained move under $54.46.