October West Texas Intermediate crude oil futures are trading lower and in a tight range before the regular session opening. Volume is also down as investors await the release of the latest U.S. Energy Information Administration report at 1430 GMT. Traders are expecting the report to show a drawdown of about 3.3 million barrels.
Yesterday’s American Petroleum Institute report for the week-ending August 18 showed a drawdown as forecast. However, gasoline inventories rose unexpectedly. This disappointing news is also helping to hold the market in a pre-market range.
Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since August 1. A trade through $46.62 will change the main trend to down. A move through $48.91 will shift momentum back to the upside.
On the downside, the major support zone is $46.52 to $45.57.
The main range is $50.51 to $46.62. Its retracement zone at $48.57 to $49.02 is resistance. It stopped the rally on Monday at $48.91.
The short-term range is $46.62 to $48.91. Its retracement zone is $47.77 to $47.49. This zone is providing support.
Forecast
Based on the current price at $47.71 at 1015 GMT, the direction of the market today will be determined by trader reaction to $47.77 and $47.49.
A sustained move over $47.77 will indicate the presence of buyers. This could trigger an acceleration to the upside with potential targets at $48.51 and $48.57.
The 50% level at $48.57 is another trigger point for an acceleration into the Fibonacci level at $49.02.
A sustained move under $47.49 will signal the presence of sellers. This could fuel a sharp break into the next uptrending angle at $47.12. Another uptrending angle comes in at $46.87. This is the last potential support angle before the $46.62 main bottom and the major 50% level at $46.52.
The market could collapse if $46.52 is taken out with increasing selling volume.
Look for volatility after the release of the EIA report. Look for a bullish tone over $47.77 and a bearish tone under $47.49. However, volume is low so don’t get whipsawed.
This article was originally posted on FX Empire