Crude Oil Price Update – Way of Least Resistance is Down; Rally Could Be Labored Event

Crude oil futures posted a wicked two-sided trade on Tuesday before closing lower for the session. The up move was fueled by the easing of tensions over a trade war and worries over possible supply reductions in the Middle East due to escalating issues between Iran and Saudi Arabia. Sellers responded to fears over rising U.S. production.

May West Texas Intermediate Crude Oil futures settled at $65.25, down $0.30 or -0.46%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside on Monday with the formation of a closing price reversal top and subsequent confirmation of the chart pattern early Tuesday.

The confirmation of the closing price reversal top doesn’t mean the trend is changing to down, but it could trigger the start of a two to three day correction.

A trade through $66.55 will negate the chart pattern and signal a resumption of the uptrend.

The short-term range is $60.18 to $66.55. Its retracement zone at $63.37 to $62.61 is the primary downside target. The main retracement zone comes in at $62.80 to $61.81. The combination of the two retracement zones creates a potential support cluster at $62.80 to $62.61.

Daily Swing Chart Technical Forecast

We’re looking for a downside early Wednesday because the closing price reversal top tends to lead to a 2 to 3 day correction equal to 50% – 61.8% of the last rally. If sellers follow-through as planned then look for the break to continue into $63.37 to $62.61.

Since the main trend is up, buyers are likely to come in on a test of the short-term retracement zone. This could trigger a technical bounce.

Any rally is likely to be labored because of a series of potential resistance levels ranging from $66.02 to $67.31. The latter is the trigger point for an acceleration to the upside.