Crude Oil Price Update – Decision Time; Play for Upside Breakout or Pullback into $77.49 to $76.57?

·2-min read

U.S. West Texas Intermediate crude oil futures are inching lower early Wednesday after posting a two-sided trade the previous session. Prices are currently hovering just below a seven-year high reached earlier in the week as traders assess the impact of a strong U.S. Dollar, which makes the commodity more expensive for those holding other currencies.

Helping to underpin the market are worries that soaring coal and natural gas prices in China, India and Europe will stoke inflation and slow global growth, reducing oil demand.

At 03:17 GMT, December WTI crude oil futures are trading $79.61, down $0.31 or -0.39%.

Bullish traders are still focused on whether soaring gas and coal prices will lead to more demand for oil products for power generation.

Due to drive into the highest level since 2014, bullish traders are beginning to question valuation which means they are trying to rationalize buying strength at these high levels or playing for a pullback into support areas.

Daily December WTI Crude Oil
Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $80.31 will signal a resumption of the uptrend. A move through $74.67 will change the main trend to down.

The first minor range is $74.67 to $80.31. Its 50% level or pivot at $77.49 is potential support.

The second minor range is $72.82 to $80.31. Its 50% level comes in at $79.57.

The short-term range is $69.05 to $80.31. Its retracement zone at $74.68 to $73.35 is the nearest value area for new buyers.

Daily Swing Chart Technical Forecast

The direction of the December WTI crude oil market on Wednesday is likely to be determined by trader reaction to $79.92

Bearish Scenario

A sustained move under $79.92 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling pressure to extend into the first pivot at $77.49.

Look for a technical bounce on the first test of $77.49. If it fails then look for the move to continue into $76.57. Once again, look for buyers on the first test. Taking it out, however, could trigger a further break into the support zone at $74.68 to $73.35.

Bullish Scenario

A sustained move over $79.92 will signal the presence of buyers. If this move generates enough upside momentum then look for the buying to possibly extend into this week’s high at $80.31, followed by a pair of 2014 tops at $81.37 and $81.71.

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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