Crude Oil Prices Snap Back to 55 After Sellers Thwarted at Support
WTI Crude Oil Talking Points:
- WTI crude oil prices have put in a vigorous bounce after last week’s re-test of support around the June lows.
- Price action has already jumped back to the 55-handle, which is an area of prior support-turned-resistance, which can keep the door open for bearish swing strategies.
- The big picture item of interest in wti is the 42.40 level that currently sits as the three-year-low; which could function as near-term targets for short-term breakout strategies. And if that level comes into play, something much larger might be afoot.
It’s been turn-around type of price action over the past few trading days in crude oil. As looked at last week, bears were back in-charge of near-term price action, pushing prices in WTI all the way down for a visit of the support range that came into play around the June lows. This zone is comprised of two Fibonacci levels at 50.54 and 51.64; with the latter of those prices coming into play last Wednesday ahead of a vigorous bounce. This is technically below the June swing, which bottomed out just a few cents higher on the chart, and this a fresh seven-month-low.
WTI Crude Oil Four-Hour Price Chart
The three-day-bounce in crude oil prices has pushed right back up to another area of interest around the 55-handle. This zone had helped to cauterize support in mid-July; soon becoming resistance earlier this month as prices had started to fall with vigor. A hold of resistance here keeps the door open for bearish plays in WTI, looking for short-side swings targeting a re-test of the June support zone that recently came into play. Along the way, nearer target potential exists around 53.25 and 52.50, each of which can be used for break-even stop moves while seeking out that larger bearish move down towards the 50-handle.
WTI Crude Oil Eight-Hour Price Chart
Crude Oil Long-Term
The primary point of attraction here for short-side plays wouldn’t be looking for just another revisit to support; but, rather, for the third test of this very key zone on the chart to open the door for a deeper downside break. And given the current fundamental environment in which global growth remains in drawdown, and cheaper crude prices could very much come into play even as risk markets are pressing back towards all-time-highs.
On a longer-term, bigger-picture basis, the level of 42.40 continues to stand out with interest. This is the current three-year-low in wti crude oil and its already turned-in multiple support inflections. But, similar to the shorter-term scenario looked at above, the allure is in the potential for a breakdown as a push below this level could see crude prices trading back in the 30’s before too long. Nonetheless, that scenario remains a bit distant and, for now, the 42.40 level is of interest for near-term breaks below the 50-handle.
WTI Crude Oil Weekly Price Chart
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--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.