Crude Oil Price Update – Trader Reaction to $47.49 Will Determine Direction Today

October West Texas Intermediate Crude Oil futures are trading lower shortly before the cash market opening. The market is feeling pressure due to demand concerns.

With the Gulf Coast of Texas refineries closed because of hurricane Harvey, demand for crude oil is declining. There is also expected to be a shortage of gasoline. This drove unleaded fuel to a 2-year high.

It’s going to take several days to assess the damage to the infrastructure from the hurricane so investors are going to have to be prepared for volatile speculative reactions.

Right now the news is bearish because of expectations of lower refinery demand. However, prices may get cheap enough to bring in new buyers and this could trigger a strong short-covering rally.

Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the August 1 top at $50.51. A trade through $46.62 will change the main trend to down. A trade through $48.91 will signal a resumption of the uptrend.

The major retracement zone support is $46.52 to $45.57.

The main range is $50.51 to $46.62. Its retracement zone at $48.57 to $49.02 is a potential resistance area.

The short-term range is $46.62 to $48.91. Its retracement zone at $47.77 to $47.49 is the primary downside target. Crude oil is currently straddling this zone. Buyers are going to try to produce a potentially bullish secondary higher bottom. Sellers are going to try to trade through this zone in an effort to turn the main trend to down and make $48.91 a new swing top.

Forecast

Based on the current price at $47.53 and the earlier price action, the direction of the crude oil market today is likely to be determined by trader reaction to the short-term Fibonacci level at $47.49.

A sustained move over $47.49 will indicate the presence of buyers. This could drive the market into the 50% level at $47.77 and the long-term downtrending angle at $48.14.

Crossing to the strong side of the downtrending angle at $48.14 will put the market in a bullish position with the next likely target zone $48.57 to $49.02.

A sustained move under $47.49 will signal the presence of sellers. This could drive the market into the uptrending angle at $47.06. This is the last potential support angle before the $46.62 main bottom and the major 50% level at $46.52.