Crude Oil Update – Market Steady Ahead of EIA Report

June West Texas Intermediate Crude Oil futures are trading lower as investors prepare for the release of the U.S Energy Information Administration’s weekly inventories report. Traders are looking for a 1 million barrel draw, but we could see a surprise since the American Petroleum Institute’s report showed a build instead of a draw.

Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower.

On Tuesday, the market produced a potentially bullish closing price reversal bottom. However, it has not been confirmed. A trade through $49.83 will confirm the chart pattern and could trigger the start of a 2 to 3 day retracement into at least $51.51.

The first target on the upside is a Fibonacci level at $50.09. This is followed by $50.86 then $51.51.

Forecast

Based on the current price at $49.22 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to a downtrending angle at $49.64 and an uptrending angle at $49.08.

Taking out $49.64 will signal the presence of buyers. This could trigger the upside momentum needed to test the Fib at $50.09. This is another trigger point for an acceleration into $50.58 then $50.86.

The inability to overcome $59.64 will indicate the presence of sellers. This could drive the market into the next uptrending angle at $49.08. If this angle fails then look for a test of the reversal bottom at $48.87.

Taking out $48.87 will negate the chart pattern. This could drive the market into $48.33. This is the last potential support angle before the $47.58 main bottom.

Look for an upside bias to develop on a sustained move over $49.64 and a downside bias on a sustained move under $49.08.

Also watch the price action at $49.83 because taking out this level will confirm the reversal bottom.