Crude Oil Price Update – Trader Reaction to $50.30 Will Determine Direction

November West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening. There is no major news to fuel the weakness so I have to chalk up the price action to profit-taking after last week’s strong rally.

Underpinning the markets at this time are bullish demand forecasts from OPEC and the International Energy Administration. The catalysts that could continue to drive the upside momentum are another drop in U.S. rig drilling and increased demand from refineries that had been knocked out by Hurricane Harvey.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $50.88 will signal a resumption of the uptrend. A move through $47.59 will change the main trend to down.

The major range is $54.94 to $42.80. Its retracement zone is $50.30 to $48.87. This zone is controlling the longer-term bias of the market. Currently, crude oil is testing the major Fibonacci level at $50.30. Trader reaction to this level will tell us if the buyers or sellers are in control.

Daily Forecast

Based on the current price at $50.13 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the Fibonacci level at $50.30.

A sustained move under $50.30 will signal the presence of sellers. If this action draws the attention of sellers, we could see an acceleration into the support cluster formed by an uptrending angle at $48.89 and the major 50% level at $48.87. Since the trend is up, buyers are likely to come in on a test of $48.89 to $48.87.

A sustained move over $50.30 will indicate the presence of buyers. The first target is last week’s high at $50.88. This is followed by a long-term downtrending angle at $51.53.

Watch the price action and read the order flow at $50.30 all session. Trader reaction to this level will tell us if the buyers are still in control, or if the sellers are retaking control.