Crude Oil Price Update – Testing Retracement Zone at $53.95 to $53.14

U.S. West Texas Intermediate crude oil futures are trading sharply lower at the mid-session on Tuesday. The early selling pressure was fueled by concerns over demand due to the tension between the United States and China, and signs that OPEC may be losing it grip over production cuts. The second wave of selling pressure hit after the release of a weaker than expected ISM U.S. Manufacturing PMI report, which indicated a deteriorating U.S. economy.

At 16:54 GMT, October WTI crude oil futures are trading $53.53, down $1.57 or -2.87%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $52.96 reaffirmed the downtrend. The main trend will change to up on a move through $56.89.

The main range is $60.93 to $50.50. Its retracement zone at $55.72 to $56.95 is resistance. This zone stopped rallies at $56.89, $57.13 and $57.40.

The short-term range is $50.50 to $57.40. Its retracement zone at $53.95 to $53.14 is potential support. The market is currently trading inside this zone.

Daily Technical Forecast

Based on the early price action, the direction of the October WTI crude oil futures contract into the close is likely to be determined by trader reaction to the short-term Fibonacci level at $53.14.

Bullish Scenario

A sustained move over $53.14 will indicate the presence of aggressive counter-trend buyers. If this move creates enough upside momentum then look for an intraday rally to possibly extend into the short-term 50% level at $53.95, followed by the downtrending Gann angle at $54.89.

Bearish Scenario

A sustained move under $53.14 will signal the presence of sellers. The first target is an uptrending Gann angle at $52.75. This is a potential trigger point for an acceleration to the downside with the next target angle coming in at $51.63.