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James Hyerczyk
WTI Crude Oil

U.S. West Texas Intermediate crude oil futures are trading lower early Wednesday as concerns over the lack of progress in the trade talks between the United States and China have dampened the optimism that has been fueling the rally since October 31. A forecast by the International Energy Agency (EIA), calling for slower global oil demand growth post-2025, also weighed on prices. Later today, traders will get the opportunity to react to the latest weekly supply data from the American Petroleum Institute (API).

At 05:09 GMT, January WTI crude oil is trading $56.70, down $0.15 or -0.26%.

Daily January WTI Crude Oil

Daily Swing Chart 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 on November 6 at $57.87.

A trade through $57.87 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through $53.84.

The minor trend is also up. A trade through $55.77 will change the minor trend to down. This will also confirm the shift in momentum.

The main range is $61.48 to $50.69. Its retracement zone at $56.08 to $57.36 is controlling the near-term direction of the market. WTI crude oil is currently trading inside this zone.

The short-term range is $53.84 to $57.87. Its retracement zone at $55.86 to $55.38 is potential support. It stopped the selling on November 8 at $55.77.


Daily Swing Chart Technical Forecast

Based on this week’s price action and the current price at $56.70, the direction of the January WTI crude oil futures contract the rest of the session on Wednesday is likely to be determined by trader reaction to the main Fibonacci level at $57.36.

Bearish Scenario

A sustained move under $57.36 will indicate the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the main 50% level at $56.08. This is followed by the short-term 50% level at $55.86, the minor bottom at $55.77 and the short-term Fibonacci level at $55.38.

The Fib level at $55.38 is a potential trigger point for an acceleration to the downside with the $53.84 main bottom the next likely downside target.

Bullish Scenario

A sustained move over $57.36 will signal the presence of buyers. This could trigger a rally into the main top at $57.87. The market could accelerate to the upside over the main top with the next target main top coming in at $58.64.

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