Crude Oil Price Update – Traders Trying to Establish Support at $55.62 to $54.50 Retracement Zone

U.S. West Texas Intermediate crude oil futures are weakening into the close on Friday, while in a position to post an almost 8% loss for the week. The market is slowly losing steam from today’s earlier rally that was fueled by a rise in tensions between the United States and Iran in response to the U.S. Navy’s destruction of an Iranian drone in the Strait of Hormuz.

At 17:54 GMT, September WTI crude oil futures are trading $55.53, up $0.11 or +0.18%.

Also weighing on prices are concerns slowing economic growth could dent global oil demand. The International Energy Agency (IEA) does not expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets, the IEA’s Fatih Birol said on Friday in public comments.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out the last swing bottom at $56.13. The trend will change to up on a trade through $61.02. This is highly unlikely, but on Monday, the market will be down seven sessions from its last main top, which could put it in a position to form a closing price reversal bottom.

The main range is $50.91 to $61.02. Its retracement zone at $55.62 to $54.50 is providing support. This may be enough to fuel a short-term counter-trend rally. If it fails, the selling could escalate to the downside.

On the upside, the major resistance zone is $58.41 to $60.18.

Daily Technical Forecast

Into the close on Friday, traders should watch the price action and read the order flow at $55.62.

Bullish Scenario

A sustained move over $55.62 will indicate the presence of buyers. If this creates enough late session upside momentum then look for a rally. It’s unlikely to be tested, but the nearest resistance angle drops in at $58.02.

Bearish Scenario

A failure to hold $55.62 will signal the presence of sellers. Crossing to the weak side of a pair of Gann angles at $55.02 and $54.79 will indicate the selling is getting stronger. This could lead to a test of the Fibonacci level at $54.50. If this potential support level fails then look for an acceleration to the downside next week.