Crude Oil Price Update – Strengthens Over $55.72, Weakens Under $55.30

U.S. West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening and the release of the latest U.S. Non-Farm Payrolls report for August, but is still in a position to post a small weekly gain. Today’s weakness comes as a surprise since this week has been filled with potentially bullish data including the announcement of the resumption of U.S.-China trade talks, strong service sector reports from the U.S. and China and a bigger than expected drawdown in U.S. inventories.

At 11:45 GMT, October WTI crude oil futures are trading $55.43, down $0.88 or -1.56%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. It turned up on Thursday when buyers took out three main tops at $56.89, $57.13 and $57.40. The move should’ve paid off better for buyers with a continuation into at least $58.86. Instead, traders took profit on the move, leading to today’s weakness. The price action suggests buy stops rather than new buying fueled the change in trend. It also means the fundamentals are so weak, investors are being tentative about buying strength. Bullish traders are hoping they want to buy value.

A trade through $57.76 will signal a resumption of the uptrend, while a break through $52.84 will change the main trend to down.

The main range is $60.93 to $50.50. Its retracement zone at $55.72 to $56.95 is acting like resistance. It is also controlling the near-term direction of the market.

The short-term range is $52.84 to $57.76. Its retracement zone at $55.30 to $54.72 is potential support. This zone stopped the selling earlier at $54.91.

The intermediate range is $50.50 to $57.76. Its retracement zone at $54.13 to $53.27 is the most important support.

Daily Swing Chart Technical Forecast

Based on the earlier price action, the direction of the October WTI crude oil futures contract the rest of the session on Friday is likely to be determined by trader reaction to the short-term 50% level at $55.30.

Bullish Scenario

A sustained move over $55.30 will indicate the presence of buyers. Overcoming the main 50% level at $55.72 will indicate the buying is getting stronger. If this generates enough upside momentum then look for the rally to possibly extend into the main Fibonacci level at $56.95, followed by the main top at $57.76.

Bearish Scenario

A sustained move under $55.30 will signal the presence of sellers. The next downside target is the short-term Fibonacci level at $54.72. If this fails then look for the selling to possibly extend into the retracement zone at $54.13 to $53.27.