Crude Oil Price Update – Trying to Build Upside Momentum Over Major Retracement Zone

U.S. West Texas Intermediate Crude Oil futures settled higher last week and in a position to breakout to the upside. The price action was driven by concerns over supply due to the looming sanctions against Iran, which are expected to begin on November 1.

Traders are also reacting to reports that Saudi Arabia is comfortable with Brent crude oil moving north of $80 per barrel. There was also some indecision later in the week as to how OPEC and its allies would distribute the 1.4 million barrel per day production increase amid reports that it may tack on another 500,000 million barrel per day increase. All of this was supposed to be decided at a strategic meeting in Algeria on Sunday.

Last week, November WTI Crude Oil settled at $70.78, up $2.01 or +2.92%.

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. The uptrend was reaffirmed last week when buyers took out the May main top at $71.10. A trade through $62.48 will change the main trend to down.

The minor trend is also up. The minor trend will change to down on a move through $66.67. This will also shift momentum to the downside.

The major or futures contract range is $89.34 to $40.95. Its long-term retracement zone is $70.86 to $65.15. The market had been trading inside this range since May, however, last week’s price action strongly indicates the market is getting ready to breakout to the upside. This is a potentially bullish development.

The minor range is $66.67 to $71.80. If there is a short-term pullback then look for a move into its 50% level at $69.24. This is the nearest minor support.

Weekly Swing Chart Technical Forecast

Based on last week’s close at $70.78, the direction of the November WTI Crude Oil futures contract this week is likely to be determined by trader reaction to the long-term Fibonacci level at $70.86.

A sustained move over $70.86 will indicate the presence of buyers. If this move generates enough upside momentum then look for buyers to make a run at last week’s high at $71.80. This is a potential trigger point for an acceleration to the upside.

A sustained move under $70.86 will signal the presence of sellers. If this move attracts enough sellers then look for a minimum break into the short-term pivot at $69.24. Since the main trend is up, we could see a technical bounce on the first test of this level. If it fails then look for a possible break into the minor bottom at $66.67.