Crude Oil Price Update – Bullish Over $56.94, Bearish Under $56.57

January West Texas Intermediate crude oil futures jumped 2.46% on Friday, retracing much of the week’s losses but not enough to avoid its first weekly decline in six weeks. The main uptrend is still being underpinned by expectations of an extension of the OPEC-led deal to cut production and trim the global supply. However, concerns were raised last week over rising U.S. output and by doubts that Russia would support the extension.

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the $58.14 top on November 8. A trade through this top will change the main trend to up. A move through $55.00 will indicate the selling is getting stronger.

The short-term range is $58.14 to $55.00. Its retracement zone is $56.57 to $56.94. The market is currently trading inside this zone. Trader reaction to this zone is likely to determine the short-term direction of the market.

The main range is $51.09 to $58.14. Its retracement zone is $54.62 to $53.78. This is the primary downside target.

The first break from $58.14 targeted the retracement zone, but the selling stopped at $55.00. If this low fails then look for an eventual test of the retracement area.

The direction of the market on Monday is likely to be determined by trader reaction to $56.57 to $56.94. Bearish counter-trend sellers are going to try to stop the rally inside this zone. They are going to try to form a potentially bearish secondary lower top. Buyers are going to try to overtake the zone in an effort to make $55.00 a new main bottom.