Crude Oil Price Update – Strong Upside Bias Developing, $50.43 Next Upside Breakout Level

September West Texas Intermediate crude oil futures are trading higher as investors continue to react to yesterday’s reported decline in inventories and as the Saudis prepare to cut crude supplies to its major Asian clients.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has slowed since the closing price reversal top at $50.43 on August 1. A trade through this level will negate the closing price reversal top and signal a resumption of the uptrend. The next major upside target over this level is the May 25 main top at $52.38.

On the downside, the support is a series of retracement levels at $48.52, $47.92 and $47.32.

Forecast

The tone of the market is strong, but under control. Traders seem to be a little cautious as the market approaches the top at $50.43. Buyers are in a position to take out this top. The key to sustaining a breakout over this level will be whether the move is fueled by real buying or buy stops.

Taking out $50.43 could drive the market into the next downtrending angle at $50.73. This is the last major downtrending angle before the $52.38 main top.

On the downside, the first target is a downtrending angle at $49.07. This is followed by an uptrending angle at $48.65 and a major Fibonacci level at $48.52.

Look out to the downside if $48.52 fails as support.