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James Hyerczyk
WTI Crude Oil

U.S. West Texas Intermediate crude oil futures are putting in another impressive performance on Monday. Not only is the market in a position to close higher for the second consecutive session, but today, it was able to recover from early session weakness. This took place in the wake of escalating concerns over U.S.-China trade relations.

At 19:37 GMT, September WTI crude oil is trading $54.74, up $0.24 or +0.44%.

Traders seem to be shrugging off forecasts of a recession from top Wall Street firms including Goldman Sachs and Bank of America Merrill Lynch, and instead seem to be reacting to the possibility of additional production cuts. Perhaps they anticipate bullish inventories reports from the American Petroleum Institute (API) on Tuesday, and the U.S. Energy Information Administration (EIA) on Wednesday.

Daily September WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $50.52 will signal a resumption of the downtrend after the three-day counter-trend rally. The main trend will change to up on a move through $58.82.

Before the market can change the main trend to up, it has to go through a number of retracement levels.

Firstly, it is currently trading inside a long-term retracement zone at $55.29 to $52.78.

The short-term range is $58.82 to $50.52. Its 50% level is at $54.67.

The intermediate range is $61.02 to $50.52. Its retracement zone at $55.77 to $57.01 is the next upside target.

Since the main trend is down, we’re likely to see a labored rally until buyers can overtake these levels.


Daily Swing Chart Technical Forecast

Based on Monday’s price action and the current price at $54.67, the direction of the September WTI futures contract into the extended close is likely to be determined by trader reaction to the short-term 50% level at $54.67.

Bearish Scenario

A sustained move under $54.67 will indicate the presence of sellers. Crossing to the weak side of $54.50 will put the market lower for the session and could trigger a further break into the main Fibonacci level at $52.78.

Bullish Scenario

A sustained move over $54.67 will signal that counter-trend buyers are still propping up the market. If this move gains traction then look for the move to possibly extend into the main 50% level at $55.29. Overtaking this level could extend the rally into the intermediate 50% level at $55.77.

The intermediate 50% level at $55.77 is the potential trigger point for an acceleration into the intermediate Fibonacci level at $57.01.

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