Crude Oil Price Update – Trade Through $68.09 Shifts Momentum to Downside

U.S. West Texas Intermediate crude oil futures settled lower last week amid pressure from rising production. After trading higher early in the week, the market plunged on July 11 after Libya announced it was returning oil to the market. Prices were able to recover somewhat into the close after the International Energy Agency (IEA) warned that higher production from Saudi Arabia and Russia would limit spare capacity, making the market vulnerable to future supply shocks.

September WTI crude oil settled last week at $69.95, down $1.62 or -2.26%.

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. However, momentum may be getting ready to shift to the downside following last week’s closing price reversal top chart pattern. A trade through $68.09 will confirm the chart pattern. This could trigger the start of a 2 to 3 week correction.

A trade through $72.98 will negate the closing price reversal top chart pattern and signal a resumption of the uptrend. The main trend will change to down on a trade through $62.99.

On the upside, the nearest resistance is the contract’s Fibonacci level at $70.70. This is followed by $72.98 and the next major top at $81.09.

The short-term range is $62.99 to $72.98. Its retracement zone at $67.98 to $66.80 is the first downside target. Since the trend is up, buyers could come in on a test of this zone. If it fails, the selling could extend into the contract’s 50% level at $64.93.

The main range is $54.96 to $72.98. Its retracement zone comes in at $63.92 to $61.78. The last main bottom at $62.99 falls inside this zone.

Weekly Technical Forecast

Based on last week’s price action and close at $69.95, the direction of the September WTI crude oil futures contract is likely to be determined by trader reaction to the Fibonacci level at $70.70.

A sustained move over $70.70 will indicate the presence of buyers. Overcoming the steep uptrending Gann angle at $70.99 will indicate the buying is getting stronger. This could create the upside momentum needed to challenge last week’s high at $72.98. This price is a potential trigger point for an acceleration into the major downtrending Gann angle at $76.28.

A sustained move under $70.70 will signal the presence of sellers. This could trigger a break into the short-term retracement zone at $67.98 to $66.80. An uptrending Gann angle comes in at $66.99, it falls inside the short-term retracement zone, making it a valid downside target also.

If $66.80 fails as support then look for an acceleration to the downside with the next targets layered at $64.99, $64.93 and $63.92. This are the last potential support levels before the $62.99 main bottom.