U.S. West Texas Intermediate crude oil futures drifted lower most of the session on Monday as concerns over falling global demand continued to weigh on prices. The current wave of selling is being fueled by Friday’s unexpectedly slower China industrial output growth report. Losses were likely limited, however, by worries about a supply disruption due to increased tensions in the Middle East following last week’s attacks on two oil tankers in the Gulf of Oman. On Tuesday, traders will get a response to the American Petroleum Institute’s weekly inventories report.
At 19:45 GMT, August WTI crude oil futures are trading $52.14, down $0.63 or -1.19%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, the inside day suggests investor indecision and impending volatility.
A trade through $54.99 will change the main trend to up. A move through $50.79 will reaffirm the downtrend.
The short-term range is $50.79 to $54.99. The market is currently straddling its retracement zone at $52.89 to $52.39. This zone is controlling the minor direction of the market. A close below the Fibonacci level at $52.39 will indicate a downside bias.
The main range is $64.03 to $50.79. If the main trend changes to up then its retracement zone at $57.41 to $58.97 will become the primary upside target.
Daily Swing Chart Technical Forecast
Based on the current price at $52.14, the direction of the August WTI crude oil futures contract into the extended close is likely to be determined by trader reaction to the Fibonacci level at $52.39.
A sustained move under $52.39 will indicate the presence of sellers. If this move creates enough downside momentum then look for a drive into the minor bottom a t $50.98. This is followed by the main bottom at $50.79.
A sustained move over $52.39 will signal the presence of buyers. Overtaking $52.89 will indicate the buying is getting stronger. The daily chart is wide open over this level with the next target the main top at $54.99.
The longer the market sits inside a trading range, the greater the chances of a volatile breakout. Given the timing of the chart pattern, it looks as if the outcome of the American Petroleum Institute’s (API) weekly storage report on Tuesday at 20:30 GMT will determine the direction of the expected breakout.
This article was originally posted on FX Empire
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