Crude Oil Price Update – Inside Move Suggests Investor Indecision, Impending Volatility

Crude oil futures are trading higher on Wednesday, but inside yesterday’s range. Traders are saying prices are being boosted by the hopes that the current stimulus from China and Japan will be enough to slow their respective economic slowdowns while holding demand steady.

Also helping to underpin the market are the OPEC-led supply cuts which are designed to trim the global supply glut and stabilize prices. Putting a lid on gains are renewed concerns over U.S.-China trade relations after a story surfaced on Tuesday saying the U.S. had cancelled the meeting between the two economic powerhouses scheduled for January 30-31 in Washington.

At 1338 GMT, March WTI crude oil futures are trading $53.10, up $0.10 or +0.23%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. Yesterday’s closing price reversal top at $54.51 could be a sign that momentum may be getting ready to shift to the downside. A trade through $52.04 will confirm the chart pattern with the main bottom at $50.66 the next likely target.

A move through $54.51 will negate the chart pattern and signal a resumption of the uptrend with the main top at $54.98 the next likely target.

The short-term range is $50.66 to $54.51. Its 50% level or pivot at $52.59 is acting like support today.

The main range is $42.67 to $54.51. If the trend changes to down then its retracement zone at $48.59 to $47.19 will become the primary downside target.

Daily Technical Forecast

Based on the early price action, the direction of the March WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to the downtrending angle at $53.92.

Bullish Scenario

A sustained move over $53.92 will indicate the presence of buyers. If this creates enough upside momentum then look for a drive into the next downtrending Gann angle at $53.95. Overtaking this angle could lead to a test of $54.51, followed by $54.98.

Bearish Scenario

A sustained move under $53.92 will signal the presence of sellers. This is followed by the pivot at $52.59 and the uptrending Gann angle at $52.17. This angle is the trigger point for an acceleration to the downside with the first target angle $50.86, followed by the main bottom at $50.66.

Watch for volatility at the end of the day with the release of the weekly inventories report from the American Petroleum Institute (API).