Crude Oil Price Update -Testing Retracement Zone; Weakens Under $55.60, Strengthens Over $57.19

U.S. West Texas Intermediate crude oil futures are trading nearly flat after giving up earlier gains. Oil prices rose slightly, shortly after the opening, after China reported a pick-up in factory activity in September. The news helped ease concerns about demand from the world’s largest crude importer amid the ongoing trade war with the United States.

At 05:09 GMT, November WTI crude oil is trading $55.87, down $0.04 or -0.08%. The intraday high is $56.57.

Gains are likely being capped by the news that Saudi Arabia has restored capacity to 11.3 million barrels per day just two weeks after an attack crippled major oil facilities.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The main trend will change to down on a trade through $53.93.

A trade through $63.89 will signal a resumption of the uptrend, but this is highly unlikely today. Nonetheless, the market is down 10 sessions from its last main top so traders should start watching for a closing price reversal bottom. This won’t change the trend, but it could lead to a 2 to 3 day rally.

The minor trend is down. A trade through $54.75 will indicate the selling pressure is getting stronger. A move through $59.49 will change the minor trend to up. This will also signal a shift in momentum to the upside.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $55.87, the direction of the November WTI crude oil market the rest of the session on Monday is likely to be determined by trader reaction to the Fibonacci level at $55.60.

Bullish Scenario

A sustained move over $55.60 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into a pair of retracement levels at $57.19 and $57.73. Taking out the latter could trigger an acceleration into $58.91 to $59.29.

Bearish Scenario

A sustained move under $55.60 will signal the presence of sellers. The first downside target is last week’s low at $54.75, followed by the main bottom at $53.93.