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James Hyerczyk
WTI Crude Oil

U.S. West Texas Intermediate crude oil futures are inching higher early Monday after buyers came in to defend last week’s low. After posting an 8% price swing in less-than-24-hours on January 8, volatility appears to have been sucked out of the market. Furthermore, there were tremendous losses on both sides of the market so it may take a few more days for traders to get back into the swing of things.

At 03:01 GMT, March WTI crude oil is trading $59.04, up $0.05 or +0.08%.

With Middle East tensions easing, traders are likely to put more emphasis on the traditional supply/demand fundamentals. The big concern heading into this week is the huge jump in gasoline inventories. This could keep a lid on crude oil prices.

Daily March WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $58.55 will signal a resumption of the downtrend. The main trend will change to up on a move through the last main top at $65.40.

The major range is formed by the October 3, 2018 main top at $71.83 and the December 24, 2018 main bottom at $45.76. Its 50% to 61.8% retracement zone at $58.80 to $61.87 is controlling the longer-term direction of the market.

Last week, the market broke out to the upside over the Fibonacci level at $61.87, but the move failed to attract enough buyers to sustain the rally. The market is now straddling the lower or 50% level at $58.80.

The short-term range is $54.85 to $65.40. Its retracement zone comes in at $60.13 to $58.88.

Combining the two retracement zones creates a potential support cluster at $58.88 to $58.80. This may be why buyers have been straddling this area the last three sessions.

The main range is $50.18 to $65.40. Its retracement zone at $57.79 to $55.99 is another potential downside target.

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Daily Swing Chart Technical Forecast

Based on last week’s price action, the direction of the March WTI crude oil market on Monday is likely to be determined by trader reaction to the 50% level at $58.80.

Bearish Scenario

A sustained move under $58.80 will indicate the presence of sellers. Taking out last week’s low at $58.55 will indicate the selling is getting stronger. This could trigger a further break into $57.79. This is a potential trigger point for an acceleration to the downside with $55.99 the next likely downside target.

Bullish Scenario

A sustained move over $58.80 will signal the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into $60.13.

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