Crude Oil Price Update – In Position to Post Closing Price Reversal Bottom with $79.29 Potential Upside Target

U.S. West Texas Intermediate crude oil futures are edging higher on Monday after reversing earlier losses after U.S. investment bank Goldman Sachs said the recent declines in oil prices were “excessive” given that the oil market remains in a deficit.

Nonetheless, gains remained capped by concerns over rising COVID-19 cases in Europe and a potential release of Japanese and Indian oil reserves. Essentially, the major worries for bullish traders at this time are oversupply and weak demand.

At 15:42 GMT, January WTI crude oil futures are trading $76.72, up $0.78 or +1.03%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $74.76 will signal a resumption of the downtrend. Taking out the main bottom at $74.25 will reaffirm the downtrend.

The main trend will change to up on a trade through $83.30. This is highly unlikely, but the market is in a position to post a potentially bullish closing price reversal bottom. This won’t change the main trend to up, but if confirmed, it could trigger the start of a 2 to 3 day retracement of the last sell-off.

Based on the current price at $76.72, the nearest support is a pair of 50% levels at $76.22 and $75.25.

On the upside, a pair of 50% levels at $78.09 and $79.29 are potential resistance.

Daily Swing Chart Technical Forecast

The direction of January WTI crude oil futures into the close on Monday is likely to be determined by trader reaction to $75.94.

Bullish Scenario

A sustained move over $75.94 will indicate the presence of buyers. Overtaking $76.22 will indicate the buying is getting stronger. If this creates enough upside momentum then look for a surge into $78.09, followed by $79.29.

Bearish Scenario

A sustained move under $75.94 will signal the presence of sellers. The first downside target is $75.25, followed by $74.76 and the main bottom at $74.25.

Taking out $74.25 will reaffirm the downtrend. This could trigger an acceleration into $72.36 – $72.30.

Side Notes

A close over $75.94 will form a closing price reversal bottom. If confirmed on Tuesday, we could see a 2 to 3 day rally into $79.29.