Crude Oil Price Update – Closing Price Reversal Top Could Lead to Near-Term Test of $57.37 to $56.78

U.S. West Texas Intermediate crude oil futures are trading lower on Monday at the mid-session, but have recovered substantially from early session weakness that had driven prices to their lowest level since March 15. The market is currently in a position to turn higher for the session.

The early session sell-off was fueled by worries about lower future demand. Concerns began to be raised late last week after the Fed lowered growth forecasts and Germany reported weaker-than-expected factory output. The combination of events triggered a steep drop in U.S. Treasury yields which led to an inverted Treasury yield.

Prices began to recover in sync with a rebound in the stock market as early sellers took profits and weaker shorts covered positions.

At 16:20 GMT, May WTI crude oil futures are trading $59.02, down $0.02 or -0.03%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at $60.39 on March 21. A trade through this top will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is down. This move confirms the shift in momentum.

On the upside, the resistance is a 50% level at $59.63. The short-term range is $54.87 to $60.39. Its retracement zone at $57.37 to $56.78 is the primary downside target. Since the main trend is up, buyers are likely to come in on a test of this zone.

Daily Technical Forecast

Given the current price at $59.02 and the intraday momentum, the first upside target is a downtrending Gann angle at $59.39. Overtaking this angle will indicate the buying is getting stronger with the next target a 50% level at $59.63, followed by a downtrending Gann angle at $59.89.

If the selling pressure resumes then we could see a retest of today’s intraday low at $58.17. If this fails then look for the selling to possibly extend into the uptrending Gann angle at $57.62.