U.S. West Texas Intermediate crude oil futures closed lower on Monday. Volume was well below average ahead of the New Year’s holiday. There were no major news events yesterday with the rally being fueled primarily by investor reaction to stronger equity prices. Positive comments from President Trump about U.S.-China trade negotiations may have encouraged some short-covering.
On Monday, February WTI crude oil settled at $45.41, up $0.08 or +0.18%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The main trend will change to up on a trade through $54.77. The down trend will resume on a move through $42.36.
The short-term range is $42.36 to $47.00. Its 50% level or pivot at $44.68 is controlling the short-term direction of the market. This level has provided support the last three sessions.
The main range is $54.77 to $42.36. Its retracement zone at $48.57 to $50.03 is the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this zone.
Daily Swing Chart Technical Forecast
Based on Monday’s price action, the direction of the February WTI crude oil market on Wednesday is likely to be determined by trader reaction to the short-term pivot at $44.68.
Bullish Scenario
A sustained move over $44.68 will indicate the presence of buyers. This could trigger a rally into last week’s high at $47.00. Overtaking this level will indicate the buying is getting stronger. This could create the momentum needed to challenge the main 50% level at $48.57.
Bearish Scenario
A sustained move under $44.68 will signal the presence of sellers. This could trigger an acceleration to the downside with the next target the minor bottom at $42.36. This is followed by the January 20, 2016 main bottom at $41.48.