Crude Oil Price Update – Bullish, but Looking Overbought

February West Texas Intermediate Crude Oil futures are trading higher on Tuesday. The market is being driven higher by fresh hedge fund buying. Speculators seem to be betting that the OPEC-led plan to cut production, trim the excess global supply and stabilize prices will offset rising U.S. production that is forecast to hit 10 million barrels per day shortly.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when the market traded to $62.56.

Despite the strong rally, the market may be vulnerable to a potentially bearish closing price reversal top. Today is the 16^th day up from the last main bottom on December 14, putting the market in the “window of time” for a potentially bearish closing price reversal top.

A break back under the former top at $62.02 will be the first sign of weakness.

Daily Technical Forecast

Based on the early trade, it looks like the direction of the market today will be determined by trader reaction to $62.02.

A sustained move over $62.02 will signal the presence of buyers. This could trigger the upside momentum needed to challenge $62.56. A trade through this level will indicate the buying is getting stronger.

A sustained move under $62.02 will indicate the return of sellers. The first target is the minor bottom at $61.09. If this price fails, we could see a move into the nearest uptrending Gann angle at $60.11.

Buyers are holding record net long positions so the market may have a little trouble rallying without any fresh news. Late today, the American Petroleum Institute will release its weekly inventories report. This move could create volatility.