A weaker U.S. Dollar and relatively cheap prices turned the U.S. West Texas Intermediate crude oil market higher on Monday after a weaker opening. Bargain-hunters are trying to snap a seven-day losing streak though lingering nervousness over surging cases of the Delta coronavirus variant worldwide kept sentiment guarded.
At 06:06 GMT, October WTI crude oil futures are trading $63.27, up $1.13 or +1.82%. This is up from a low of $61.74.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through the intraday low at $61.74 will reaffirm the downtrend.
A move through $69.39 will change the main trend to up. This is highly unlikely but due to the 7-10 Day Rule, the market started today’s session inside the window of time for a potentially bullish closing price reversal bottom chart pattern.
The main range is $56.24 to $74.77. Its retracement zone at $63.32 to $65.51 is controlling the near-term direction of the market, making it potential resistance.
The minor range is $69.39 to $61.74. Its retracement zone at $65.57 to $66.47 is another potential upside target. Since the main trend is down, sellers are likely to return on a test of this area.
Daily Swing Chart Technical Forecast
The direction of the October WTI crude oil market on Monday is likely to be determined by trader reaction to $62.14.
A sustained move over $62.14 will indicate the presence of buyers. The first upside target is the main Fibonacci level at $63.32. Look for sellers on the first test of this level.
Overcoming $63.32 will indicate the short-covering is getting stronger. If this move creates enough upside momentum then look for the rally to possibly extend into the main 50% level at $65.51.
A sustained move under $62.14 will signal the presence of sellers. This could lead to a retest of the intraday low at $61.74. Taking out this level will indicate the selling pressure is getting stronger with the next potential downside targets coming in at $60.68 and $59.56.
A close over $62.14 will form a closing price reversal bottom. If confirmed, this could trigger the start of a 2 to 3 day counter-trend rally. This is not a change in trend, but it does indicate the buying is greater than the selling at current price levels, giving weak shorts an excuse to book profits after a steep seven session decline.
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This article was originally posted on FX Empire