Crude Oil Price Update – Trader Reaction to $41.24 Pivot Sets the Short-Term Tone

U.S. West Texas Intermediate crude oil futures are trading higher late in the session on Friday after posting a choppy two-sided trade most of the day. The move likely means the market will finish higher for the week.

At 19:47 GMT, September WTI crude oil futures are trading $41.22, up $0.15 or +0.37%.

Prices were pressured early by escalating tensions between the United States, but turned higher after a Euro Zone report lifted market sentiment. Euro Zone business activity grew in July for the first time since the coronavirus pandemic hit, according to IHS Markit’s flash Composite Purchasing Managers’ Index (PMI).

The market turned lower shortly after the regular session opening in the U.S., following the release of flash manufacturing and services PMI reports. The reports showed the economy improved from June, but they came in lower than the forecast, which suggested the economic recovery may be slower than previously expected.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $42.51 will signal a resumption of the uptrend. The main trend will change to down on a move through the last swing bottom at $39.97.

On the upside, the resistance is a long-term 50% level at $41.72. This is a potential trigger point for an acceleration to the upside.

The minor range is $39.97 to $42.51. Its 50% level at $41.24 is controlling the price action late Friday.

The short-term range is $38.77 to $42.51. Its retracement zone at $40.64 to $40.20 is potential support. The upper or 50% level at $40.64 stopped the selling on Friday.

Short-Term Outlook

The price action over the past several weeks clearly shows that the bulls have to find a way to close over $41.72 in order to extend the rally. The daily chart shows there is plenty of room to the upside over this level with $46.00 a reasonable target.

Friday’s price action suggests that buyers may be willing to come in at $40.64 to $40.20 in an effort to defend the main bottom at $39.97. This is important because a failure to hold this bottom will change the main trend to down and could trigger an acceleration to the downside.

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