Crude Oil Update – Set for Biggest Weekly Loss in a Month

June West Texas Intermediate Crude Oil futures are trading lower shortly before the regular session opening. The market is also trading inside yesterday’s range which suggests investor indecision and impending volatility.

Fundamentally, investors are worried about increasing U.S. production. Traders are probably holding the market in a range while they await the latest oil rig figures from oil services company Baker Hughes.

Technical Analysis

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

The main range is $47.58 to $54.14. Its retracement zone is $50.86 to $50.09. The market is currently trading inside this range. Trader reaction to this zone will determine the longer-term direction of the market.

The short-term range is $54.14 to $50.50. If this bottom holds then we could see a rally into its retracement zone at $52.32 to $52.75.

Forecast

Base on the current price at $50.59, and the earlier price action, the direction of crude oil is likely to be determined by trader reaction to the 50% level at $50.86.

A sustained move under $50.86 will indicate the presence of sellers. This could drive the market into the uptrending angle at $50.21 and the main Fibonacci level at $50.09.

Taking out $50.09 could trigger an acceleration to the downside. The next major target angle comes in at $48.89.

A sustained move over $50.86 will signal the presence of buyers. This could trigger a rally into the steep downtrending angle at $51.14.

Taking out $51.14 with conviction could trigger an acceleration to the upside with the next major targets a short-term 50% level at $52.32 and a downtrending angle at $52.64.

Watch the price action and read the order flow at $50.86. Trader reaction to this level will set the tone for the day.