Crude Oil Price Update – Trader Reaction to Main Retracement Zone at $67.99 to $66.81 Will Set Near-Term Tone

U.S. West Texas Intermediate crude oil futures closed lower on Monday after an early session rally failed to gain traction. The early move may have been fueled by speculative buying related to escalating tensions between the United States and Iran. Additional buying may have been related to the start of a 24-hour strike on three oil and gas platforms in the British North Sea.

September WTI crude oil futures settled at $67.89, down $0.37 or -0.54%.

The market reached an intraday top and turned lower for the session as trader attention returned to oversupply risk.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A new main top has formed at $69.31. A trade through this level will change the main trend to up. A move through $66.29 will signal a resumption of the downtrend.

The main range is $62.99 to $72.98. Its retracement zone is $67.99 to $66.81. This zone is currently being tested. It is also controlling the near-term direction of the market.

The minor range is $70.60 to $66.29. Its 50% level or pivot at $68.45 is resistance.

The short-term range is $72.98 to $66.29. Its retracement zone at $69.64 to $70.42 is resistance.

Daily Swing Chart Technical Forecast

Based on the early trade on Tuesday, the direction of the September WTI crude oil futures market today is likely to be determined by trader reaction to the 50% level at $67.99.

Bearish Scenario

A sustained move under $67.99 will indicate the presence of sellers. Since the trend is down, this could generate the momentum needed to challenge the Fibonacci level at $66.81, followed by the main bottom at $66.29.

Taking out $66.29 will signal a resumption of the downtrend. This could also fuel an acceleration to the downside with $62.99 the next major target.

Bullish Scenario

A sustained move over $67.99 will signal the presence of buyers. This could trigger a fast move into the pivot at $68.45. The buying will strengthen over this level with $69.31 the next target.

Taking out $69.31 will change the main trend to up, but the rally could stall on a test of the retracement zone at $69.64 to $70.42.

Aggressive counter-trend buyers may try to step in on this dip in an effort to form a secondary higher bottom. Their key target is $67.80. This 50% level falls inside the major retracement zone.