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Crude Oil Price Update – Trader Reaction to $67.99 will Determine Direction This Week

By:
James Hyerczyk
Updated: Jul 23, 2018, 01:10 UTC

Based on last week’s close at $68.26, the direction of the September WTI crude oil futures contract this week is likely to be determined by trader reaction to $67.99. This is a price cluster formed by an uptrending Gann angle and the 50% level at this price.

Crude Oil

U.S. West Texas Intermediate crude oil futures had an up and down week before settling lower. Most of the damage to the downside was accredited to additional supply from Libya and speculation the U.S. may open its strategic reserve if prices were to rise too rapidly.

For the week, September WTI crude oil settled at $68.26, down $1.69 or -2.42%.

The market hit a bottom for the week on Wednesday after the U.S. Energy Information Administration reported a bigger-than-expected draw in gasoline inventories, however, a larger-than-expected build in crude oil helped limit gains.

WTI Crude Oil
Weekly September WTI Crude Oil

Weekly Technical Analysis

The main trend is up accounting to the weekly swing chart. A trade through $62.99 will change the main trend to down. A move through $72.98 will signal a resumption of the uptrend.

The market is currently trading inside the contract retracement zone with the 50% level coming in at $64.93 and the 61.8% level at $70.70. This zone is controlling the longer-term direction of the market. Holding above the 50% level is helping to give the market an upside bias.

The short-term range is $62.99 to $72.98. Last week, its retracement zone at $67.99 to $66.81 was tested successfully. This zone is controlling the short-term direction. The close on the strong side of this zone is also helping to generate an upside bias.

The main range is $54.96 to $72.98. Its retracement zone at $63.97 to $62.84 is the primary downside target.

WTI Crude Oil (Close-Up)
Weekly September WTI Crude Oil (Close-Up)

Weekly Technical Forecast

Based on last week’s close at $68.26, the direction of the September WTI crude oil futures contract this week is likely to be determined by trader reaction to $67.99. This is a price cluster formed by an uptrending Gann angle and the 50% level at this price.

A sustained move over $67.99 will indicate the presence of buyers. This could drive the market into a steep downtrending Gann angle at $68.98. Overtaking this angle could trigger an acceleration into the major Fib at $70.70, followed by a downtrending Gann angle at $70.98.

If the upside momentum continues then we could see the rally extend into downtrending Gann angles at $71.98 and $72.98. The latter is the last potential resistance angle before the $72.98 main top.

A sustained move under $67.99 will signal the presence of sellers. This could drive the market back to $66.81. Since the trend is up, look for a technical bounce on the first test of this level. If it fails then look for an acceleration to the downside with the next target angle coming in at $65.49.

Selling could continue under $65.49, but watch for buyers on a test of a series of potential support at $64.93, $64.24 and $63.97. The latter is the last potential support before the $62.99 main bottom.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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