Crude Oil Price Update – WTI Needs to Hold $48.52 to Sustain the Rally

September West Texas Intermediate crude oil futures are trading steady-to-better shortly before the regular session opening. The market is hovering near its high for the week and its highest level since June 1.

This week’s rally has been supported by Saudi Arabia’s decision to cut exports in August and a huge drawdown in inventories. In order to get the market over the hump today, investors want to see a decline in the number of producing oil rigs.

Technical Analysis

The main trend is up according to the daily swing chart. The next upside target is the May 25 main top at $52.38. A trade through $45.40 will change the main trend to down on the daily chart.

The main range is $52.38 to $42.27. Its retracement zone is $48.52 to $47.33. This zone is very important to the structure of the developing rally. Holding above this zone will indicate an upside bias is developing. Falling back below $48.52 will indicate the buying is getting weaker. Taking out the lower or 50% level at $47.33 will mean the selling pressure is increasing.

Forecast

Based on the current price at $49.09 and the earlier price action, the nearest support is the Fibonacci level at $48.52. The nearest upside target is a downtrending angle at $49.63.

A sustained move under $48.52 will indicate the presence of sellers. This could trigger an acceleration into a support cluster at $47.33.

A sustained move over the angle at $49.63 will signal the presence of buyers. This is the trigger point for an acceleration into the next angle at $51.01. This is the last potential resistance angle before the $52.38 main top.

Watch the price action and read the order flow at $48.52 all session. Trader reaction to this level will tell us if the buying is getting stronger or weaker.