Crude Oil Price Update – Trader Reaction to Fibonacci Level at $66.79 Sets the Early Tone on Tuesday

U.S. West Texas Intermediate crude oil futures closed sharply lower on Monday, putting in its worst performance since March, after an OPEC+ agreement to boost output stoked fears of a surplus just as rising COVID-19 infections once again threaten demand.

Crude oil was also pressured by a drop in investor sentiment as U.S. stocks fell aggressively Monday on concern a rebound in COVID cases would slow global economic growth.

On Monday, September WTI crude oil futures settled at $66.53, down $5.03 or -7.03%.

Demand for jet fuel was a particular concern as airlines got hit as investors reassessed whether travel among consumers would live up to high expectations due to the spread of the coronavirus. COVID cases have rebounded in the U.S. this month, with the delta variant spreading among the unvaccinated.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Monday when sellers took out the last main bottom at $70.10. A move through $74.90 will change the main trend to up.

The main range is $61.06 to $76.07. On Monday, WTI crude oil closed on the weak side of its retracement zone at $66.79 to $68.57. This area is now potential resistance.

The new short-term range is $76.07 to $65.56. Its retracement zone at $70.82 to $72.06 is a potential upside target.

Daily Swing Chart Technical Forecast

The direction of the September WTI crude oil market early Tuesday is likely to be determined by trader reaction to the main Fibonacci level at $66.79.

Bearish Scenario

A sustained move under $66.79 will indicate the presence of sellers. Taking out Monday’s low at $65.56 will indicate the selling is getting stronger. This could trigger a further break into the minor bottom at $64.60. Taking out this level could trigger an acceleration to the downside with the May 21 main bottom at $61.06 the primary downside target.

Bullish Scenario

A sustained move over $66.79 will signal the presence of buyers. This could trigger a short-covering rally into the main 50% level at $68.57. Sellers could come in on the first test of this level.

Overtaking $68.57 will indicate the counter-trend buying is getting stronger. If this is able to create enough upside momentum then look for the rally to possibly extend into the short-term retracement zone at $70.82 to $72.06.