International-benchmark Brent crude oil futures closed lower on Wednesday, but well off its lows after an industry report showed a drawdown in U.S. crude stockpiles that exceeded analyst expectations.
Earlier in the session, prices were pressured by global stock market weakness and concerns that an escalation of the trade dispute between the United States and China could cause a global economic slowdown and a drop in demand.
On Wednesday, August Brent crude oil settled at $67.87, down $0.80 or -1.18%. At 03:45 GMT, the futures contract is trading $68.03, up $0.16 or +0.24%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $65.90 will signal a resumption of the downtrend. The next main bottom targets come in at $65.73 and $64.12. The main trend will change to up on a move through $72.41.
For four sessions, the market has been consolidating inside the May 23 trading range. This suggests the steep break may have been fueled by sell-stops under the 200-Day moving average and a long-term 50% level at $67.60.
The major retracement zone at $67.60 to $71.31 is currently being tested. It is controlling the longer-term direction of the market.
The short-term range is $72.41 to $65.90. Its retracement zone at $69.16 to $69.92 falls inside the major retracement zone. It is the next upside target. Trader reaction to this zone will tell us if the bulls have returned or if the bears are regaining control.
On the downside, the retracement zone at $62.93 to $60.32 is the primary target and value area.
Daily Swing Chart Technical Forecast
Based on Wednesday’s close at $67.87 and the current price at $68.03, the direction of the August Brent crude oil market on Thursday is likely to be determined by trader reaction to the major 50% level at $67.60.
A sustained move over $67.60 will indicate the presence of buyers. The first target is the 200-Day moving average at $68.56. Overcoming this level will indicate the buying is getting stronger. This could extend the rally into the short-term 50% level at $69.16, followed by the Fibonacci level at $69.92.
A sustained move under $67.60 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possible extend into last week’s low at $65.90.
Taking out $65.90 will indicate the selling is betting stronger. This could trigger sell stops under $65.73 and $65.73.
This article was originally posted on FX Empire
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