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Crude Oil Price Update – Selling to Continue with Near-Term Target Zone at $33.52 to $31.10

James Hyerczyk

U.S. West Texas Intermediate crude oil futures fell more than 8%, and international-benchmark Brent crude dropped below $40 a barrel for the first time since June in reaction to a price cut buy Saudi Arabia and another flareup of coronavirus cases around the world that threaten renewed demand destruction.

At 19:05 GMT, October WTI crude oil is trading $37.00, down $2.77 or -6.97%. Earlier in the session, the market reached a low of $36.13, a price last touched on June 15.

Daily October WTI Crude Oil
Daily October WTI Crude Oil

Daily Technical Analysis

The main trend is down according to the daily swing chart. On Tuesday, sellers took out main bottoms at $39.00 and $37.56 with sell stops helping to accelerate the downside pressure. If the downside momentum then look for a test of the June 12 bottom at $35.25. This is followed by the May 28 main bottom at $32.66.

The short-term range is $32.66 to $43.78. On Tuesday, the market straddled its retracement zone at $38.22 to $36.91. Trader reaction to this zone should determine the next short-term move.

The main range is $23.26 to $43.78. Its retracement zone at $33.52 to $31.10 is the primary downside target and value area. It represents 50% to 61.8% of the entire April to August rally so a pullback into this area would offer a great opportunity for new buyers to enter the market in anticipation of an eventual recovery in the global economy.

Short-Term Outlook

October WTI crude oil found some support on Tuesday at a support cluster formed by a Fibonacci level at $36.91 and a steep downtrending Gann angle at $36.58.

Crossing to the weak side of the Gann angle at $36.58 could trigger another acceleration to the downside with the main 50% level at $33.52 the next target, following closely by an uptrending Gann angle at $32.96.

Holding $36.91 could indicate that this round of selling is over. This could trigger a short-covering rally with the 50% level at $38.22 the next potential upside target. This is followed by a downtrending Gann angle at $40.18.

Since the main trend is down, look for new shorts to come in on rallies into resistance. These levels are $38.22 and $40.18.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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