January West Texas Intermediate crude oil futures are trading higher shortly before the regular session opening. Traders are “cautiously long” today despite concerns that expectations of an extended OPEC-led production cut are being offset by rising output in the United States.
Daily Technical Analysis
The main trend is up according to the daily swing chart. After a four-day setback, the market has clawed back enough of its losses to put it in a position to shift momentum to the upside.
A trade through $58.14 will signal a resumption of the uptrend. A trade through $55.00 will mean 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 being tested. Trader reaction to this zone will determine the near-term direction. Aggressive counter-trend sellers will be trying to establish a secondary lower top.
The main range is $51.09 to $58.14. Its retracement zone at $54.62 to $53.78 is the primary downside target.
Daily Technical Forecast
Based on the current price at $56.77, the direction of the crude oil market the rest of the session will be determined by trader reaction to $56.57 and $56.94.
A sustained move over $56.94 will indicate the presence of buyers. Overtaking the downtrending angle at $57.02 will indicate the buying is getting stronger. This could create the upside momentum needed to challenge the next downtrending angle at $57.58. This is the last potential support angle before the $58.14 main top.
A sustained move under $56.57 will signal the presence of sellers. It will also put the market on the weak side of an uptrending angle at $56.59. This could create enough downside momentum to trigger a break into a downtrending angle at $55.89.
Crossing to the weak side of the angle at $55.89 will put the market in a bearish position. This could trigger an acceleration into $55.00 then $54.62.
Basically, look for a bullish bias to develop on a sustained move over $57.02 and for a bearish bias to develop on a sustained move under $56.57.