Crude Oil Price Update – Sustained Move Over $63.48 Will Indicate Return of Buyers

U.S. West Texas Intermediate crude oil futures broke sharply last week, producing a potentially bearish closing price reversal top in the process. The price action was fueled by mixed and sometimes confusing news which created enough uncertainty to encourage investors to take profits and square up overbought positions.

On the bullish side, supply is tightening, but the market remains adequately supplied according to the International Energy Agency. Underpinning prices are the OPEC-led supply cuts and the U.S. sanctions against Venezuela and Iran.

Last week, June WTI crude oil settled at $63.30, down $0.77 or -1.20%.

Creating the uncertainty for long investors is what OPEC and its allies are going to do about the cut of about 500,000 to 1 million barrels per day of crude oil from the new sanctions against Iran. President Trump seems to think that he’s convinced Saudi Arabia to increase production. Until the markets get a response, all we can expect is heightened volatility.

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. However, last week’s closing price reversal top indicates a shift in momentum to the downside. A trade through $66.60 will negate the closing price reversal top and signal a resumption of the uptrend.

A trade through $62.28 will confirm the closing price reversal top. This could lead to the start of a 2 to 3 week correction. The main trend will change to down on the weekly chart on a trade through $55.31.

The minor trend is down. It turned down on Friday. This also shifted momentum to the downside.

The main range is $75.65 to $43.80. Its retracement zone at $63.48 to $59.73 is controlling the longer-term direction of the market.

Another main range is $43.80 to $66.60. If the main trend changes to down then look for a correction into its retracement zone at $55.20 to $52.51.

Weekly Technical Forecast

Based on last week’s price action and the close at $63.30, the direction of the June WTI crude oil market this week is likely to be determined by trader reaction to the major Fibonacci level at $63.48.

Bullish Scenario

A sustained move over $63.48 will indicate the return of buyers. This could trigger a rally into a minor pivot at $64.44. Sellers could come in on the first test of this level, however, overcoming it is likely to trigger a retest of $66.00, followed by a downtrending Gann angle at $68.15. This is also potential resistance, however, it is also the trigger point for an acceleration into the next uptrending Gann angle at $71.90. This is the last potential resistance angle before the $75.65 main top.

Bearish Scenario

A sustained move under $63.48 will signal the presence of sellers. The next target is a short-term uptrending Gann angle at $63.31.

Taking out $62.28 will confirm the closing price reversal top. This could trigger a break into the longer-term uptrending Gann angle at $61.80. This is a potential trigger point for an acceleration into the major 50% level at $59.73.

Look out to the downside if $59.73 fails as support. This could signal the start of a steep sell-off with $55.20 the next major downside target.