U.S. West Texas Intermediate crude oil futures are trading lower at the mid-session on Tuesday, pressured by a resumption of production in the Gulf of Mexico after last week’s shutdown due to the passing of Hurricane Barry. Also keeping a cap on prices are an expected surge in U.S. shale oil production and concerns over falling demand. Underpinning the market are lingering tensions in the Middle East between the United States and Iran.
At 16:27 GMT, September WTI crude oil is trading $59.50, down $0.18 or -0.30%.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since the closing price reversal top at $61.02 on July 11.
A trade through $61.02 will negate the closing price reversal top and signal a resumption of the uptrend.
The main trend will change to down on a move through $56.13, but sellers have to take out a series of retracement levels before this will take place.
The market is currently trading inside a major retracement zone at $60.18 to $58.41. This zone is controlling the longer-term direction of the market.
The next retracement zone comes in at $59.01 to $57.47.
Daily Technical Forecast
Based on the early price action and the current price at $59.50, the direction of the September WTI crude oil futures market into the close is likely to be determined by trader reaction to the downtrending Gann angle at $59.52.
A sustained move under $59.52 will indicate the selling pressure is getting stronger. This could trigger a late session break into the Fibonacci level at $59.01, followed by a 50% level at $58.41 and an uptrending Gann angle at $57.91.
A sustained move over $59.52 will signal the return of buyers. If this creates enough upside momentum then look for a retest of a resistance cluster at $60.18 to $60.27.
Look for volatility at 20:30 GMT with the release of the American Petroleum Institute’s (API) weekly inventories report. A bearish report could drive prices sharply lower.
This article was originally posted on FX Empire
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