Crude Oil Price Update – Weekly Trend Turns Up; Major Pivot is $50.59

November West Texas Intermediate crude oil futures are trading slightly lower early Friday as investors pared positions ahead of the week-end and in response to lower demand for risky assets after North Korea fired another missile over Japan.

Fundamentally, the market is still being driven by a report earlier this week from the International Energy Administration (IEA) which said the rebalancing process is starting.

Due to the developments this week, we’re going to shift our focus on the weekly chart for this report.

Weekly Technical Analysis

The main trend is up according to the weekly swing. Yesterday, the market crossed the last swing top at $50.62 on the weekly chart for the first time this year. This changed the trend to up. A new swing bottom was then formed at $46.14.

A sustained move through $50.62 will indicate the buying is getting stronger. The next two main top targets come in at $52.62 and $54.94.

A trade through $46.14 will change the main trend to down.

The main range is $58.37 to $42.80. Its retracement zone is $59.59 to $42.42. This zone is important because sellers may come in on a test of this zone to stop the rally, or buyers may use it like a pivot and launch a rally through it.

Trading at the 50% level for the year indicates balance so the direction of crude oil the rest of the year may be determined by trader reaction to $50.59.

Forecast

Based on the current price at $50.05 and yesterday’s price action, I have determined that the direction of crude oil over the near-term will be determined by trader reaction to $50.59.

A sustained move over $50.59 will indicate that investors are willing to buy strength rather than wait for a pullback into support.

A sustained move under $50.59 will signal that crude oil is not quite ready to rally further. However, I wouldn’t be too worried about the long side unless the market crosses to the weak side of the downtrending angle at $49.37.

Whether you’re bullish or bearish, I think all roads go through $50.59 so keep an eye on the level over the near-term.