Crude Oil Price Update – Close Under $65.92 Forms Potentially Bearish Closing Price Reversal Top

U.S. West Texas Intermediate crude oil futures are trading slightly higher, but well off their highs on Monday. Prices surged early in the session, pulled up by Brent crude futures, which moved above $70 for the first time in more than a year.

The jump in oil prices came after Saudi Arabia said its oil facilities were targeted by missiles and drones on Sunday. A Houthi military spokesman claimed responsibility for the attacks.

At 10:11 GMT, May WTI crude oil futures are trading $65.95, up $0.03 or +0.05%. This is down from a high of $67.79.

The attack on the Saudi oil facilities was expected to be short-lived, but it did serve as a reminder that the Middle East is vulnerable to attacks due to simmering tensions and ongoing rivalries.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, the chart pattern suggests momentum may be getting ready to shift to the downside with the formation of a potentially bearish closing price reversal top.

A trade through $59.08 will change the main trend to down.

Earlier in the session, the market took out the October 3, 2018 main top at $66.92. This reaffirmed the uptrend. Crossing back to the weak side of this level, however, suggests the buying may be getting weaker, or the selling stronger.

The new minor range is $59.08 to $67.79. Its retracement zone at $63.44 to $62.41 is the primary downside target. Since the main trend is up, buyers are likely to come in on a pullback into this area.

Daily Swing Chart Technical Forecast

The direction of the May WTI crude oil market on Monday is likely to be determined by trader reaction to Friday’s close at $65.92.

Bullish Scenario

A sustained move over $65.92 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible retest of the intraday high at $67.79. This is a potential trigger point for an acceleration into the psychological resistance at $70.00.

Bearish Scenario

Taking out then moving back under the October 3, 2018 main top at $66.92 is the first sign of weakness on Monday.

A sustained move under $65.92 will signal the presence of sellers. If this move creates enough downside momentum then look for a potential break into the retracement zone at $63.44 to $62.41.

Side Notes

A close under $65.92 will form a potentially bearish closing price reversal top. If confirmed, this could trigger a 2 to 3 day correction with $63.44 to $62.41 the minimum downside target area.