Crude Oil Price Update – Trader Reaction to 200-Day Moving Average at $61.00 Will Determined Direction

U.S. West Texas Intermediate crude oil futures are trading lower late Monday, reversing earlier strength that was fueled by concerns over a supply disruption after tanker attacks in the Middle East. The market topped and prices retreated after China announced new tariffs of 25% on $60 billion of U.S. imports. Investors fear an escalation of the trade dispute could lead to a global economic slowdown including a possible U.S. recession. This would hurt global and domestic crude oil demand.

At 20:03 GMT, July WTI crude oil is trading $60.99, down $0.81 or -1.31%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $66.44 will change the main trend to up. A move through $60.10 will negate a closing price reversal bottom at $60.10 and signal a resumption of the downtrend. The next target after that is $58.60, followed by another main bottom at $55.80.

The major range is $75.20 to $44.20. Its retracement zone is $59.70 to $63.36. The market is currently trading inside this zone. This zone is controlling the longer-term direction of the market. On Monday, the upper or Fibonacci level at $63.36 provided resistance and essentially stopped the rally at $63.48.

The next major range is $44.20 to $66.44. If the downside momentum continues and the other main bottoms at $58.60 and $55.80 are violated, the selling is likely to extend into the its retracement zone at $55.32 to $52.70.

Daily Swing Chart Technical Forecast

Based on the current price at $60.99, the direction of the July WTI crude oil market on Tuesday is likely to be determined by trader reaction to the 200-day Moving Average at $61.00. This level is very important because it is the trend indicator used by hedge and commodity fund money managers.

Bearish Scenario

Crossing to the weak side of the 200-day Moving Average at $61.00 will indicate the presence of sellers. This could trigger a quick break into the minor bottom at $60.10 and the major 50% level at $59.70. If this retracement level fails then look for the selling to possibly extend into the next main bottom at $58.60. This is the trigger point for an acceleration into $55.80 to $55.32.

Bullish Scenario

Holding above $61.00 will signal that buyers are coming in to support the market. If this can create enough upside momentum then look for a possible retest of the Fib at $63.36. This is the trigger point for an acceleration to the upside.