Crude Oil Price Update – Retracement Zones, Triangle Pattern Indicate Impending Volatility

May West Texas Intermediate crude oil futures are trading lower and inside yesterday’s range. The price action suggests investor indecision and impending volatility. Sellers took control of the market on Monday when a U.S. Energy Information Administration report warned of increased U.S. production.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $63.05 will change the main trend to up. A move through $59.91 will signal a resumption of the downtrend.

The main range is $65.63 to $57.60. Its retracement zone at $61.64 to $62.56 is acting like resistance. This zone is also controlling the longer-term direction of the market.

The short-term range is $57.60 to $64.07. Its retracement zone at $60.84 to $60.07 is acting like support.

Daily Technical Forecast

Based on the current price at $61.20 and the early price action, the direction of the crude oil market today is likely to be determined by trader reaction to the main 50% level at $61.61.

A sustained move under $61.61 will indicate the presence of sellers. This could trigger a break into the short-term 50% level at $60.84. This is a potential trigger point for an acceleration to the downside with the next target an uptrending Gann angle at $60.23. This is followed by $60.07 and $59.91.

Another trigger point for an acceleration to the downside is $59.91.

A sustained move over $61.61 will signal the presence of buyers. The market could accelerate over this level with the next target a downtrending Gann angle at $62.38, followed by $62.56.

The major breakout levels today are $62.56 on the upside and $59.91 on the downside.

Besides the retracement levels, crude oil is also trading inside a triangle. Both patterns suggest impending volatility.