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James Hyerczyk
Crude Oil
Crude Oil

U.S. West Texas Intermediate crude oil futures are trading higher at the mid-session on Tuesday, supported by a firm stock market. The catalysts behind the strength are an optimistic outlook for a favorable outcome of US-China trade negotiations and hope that the OPEC-led supply cuts would reduce the global supply glut and stabilize prices.

At 1610 GMT, February WTI crude oil is trading $49.17, up $0.65 or +1.34%.

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Daily February WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The market is also trading inside yesterday’s range which tends to indicate investor indecision and impending volatility.

The inside move could also be indicating the market is going through a transition phase after being up nine sessions from the last main bottom on December 24.

The main range is $54.77 to $42.36. Its retracement zone at $48.57 to $50.03 is currently being tested. Trader reaction to this zone will determine the near-term direction of the market.

The minor range is $42.36 to $49.79. If there is a short-term pullback then its retracement zone at $46.08 to $45.20 will become the primary downside target.


Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the February WTI crude oil market into the close is likely to be determined by trader reaction to the main 50% level at $48.57.

Bullish Scenario

A sustained move over $48.57 will indicate the presence of buyers. If they are able to generate enough upside momentum late in the session then look for an attempt to take out yesterday’s high at $49.79. If successful then the Fibonacci level at $50.03 is next. This price is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A failure at $48.57 late in the session will signal the presence of sellers and perhaps the end of the rally. The daily chart is wide open to the downside under this level with the next major target zone $46.08 to $45.20.

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