Crude Oil Price Update – Trader Reaction to $51.27 Will Set the Tone for the Session

December West Texas Intermediate crude oil futures are trading slightly higher shortly before the regular session opening. The market spiked higher earlier in the session, but has since pulled back to nearly break-even.

Since Monday was a U.S. federal holiday, the American Petroleum Institute and U.S. Energy Information Administration weekly inventories reports have been delayed a day. The API report will be released late today and the EIA report on Thursday.

Daily Technical Analysis

The main trend is up according to the daily swing chart. Today’s early rally has made $49.44 a new higher bottom. The upside target is the main top at $53.11.

On the downside, support is layered. A 50% level at $50.60 is first support. A 61.8% level comes in at $50.01. The major support zone is $49.85 to $49.08. The main bottom at $49.44 was formed inside this zone.

The short-term range is $53.11 to $49.44. Its retracement zone at $51.27 to $51.71 was the primary upside target. This zone is currently being tested.

The retracement zone is very important because aggressive counter-trend sellers are going to try to form a potentially bearish secondary lower top. This could lead to an eventual change in trend to down.

Buyers are going to try to take out the retracement zone in an effort to set up a challenge of $53.11.

Daily Forecast

Based on the earlier price action, the direction of the market the rest of the session is going to be determined by trader reaction to the 50% level at $51.27.

A sustained move over $51.27 will indicate the presence of buyers. This could trigger a rally into the Fibonacci level at $51.71. This is followed by a downtrending angle at $51.99. This is a potential trigger point for an acceleration into another downtrending angle at $52.55.

A sustained move under $51.27 will signal the presence of sellers. This could lead to a fast drop into a steep uptrending angle at $50.94. If this angle fails as support then look for an acceleration into $50.60 and an uptrending angle at $50.19.

Watch the price action and read the order flow at $51.27 all session. Trader reaction to this level will tell us if the bulls or the bears are in control.