Crude Oil Price Update – Look for 2-3 Day Correction after Closing Price Reversal Top Confirmation

U.S. West Texas Intermediate crude oil futures are trading lower on Monday. The selling is being driven by concerns over lower demand. The catalyst behind the selling pressure is weaker-than-expected trade balance data from China. The news also encouraged some bullish traders to book profits following the recent 12-session rally.

Despite the setback, the market continues to be underpinned by the hope that the US and China will reach a trade deal. Additional support is being provided by the OPEC-led plan to cut production, trim supply and stabilize prices.

At 1353 GMT, March WTI crude oil is trading $51.20, down $0.71 or -1.37%.

Daily Technical Analysis

The main trend is down. Momentum also shifted back to down with the formation of the closing price reversal top on Friday and the subsequent confirmation earlier today.

A trade through $53.61 will negate the closing price reversal top and change the main trend to up.

The main range is $42.67 to $53.61. Its retracement zone at $48.44 to $46.85 is the primary downside target.

Daily Technical Forecast

Based on the early price action, the direction of the March WTI crude oil futures contract the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at $51.61.

Bullish Scenario

Overtaking and sustaining a rally over $51.61 will indicate the presence of buyers. The first target is 50% of the first break from $53.61. This level is $52.17. This is followed by a downtrending Gann angle at $53.29 and the main top at $53.61.

Bearish Scenario

A sustained move under $51.61 will signal the presence of sellers. The daily chart shows there is plenty of room to the downside with the next major target angle coming in at $49.17. If this angle fails as support then look for the selling to extend into the 50% level at $48.44.

The confirmation of the closing price reversal top tends to lead to a 2 to 3 day retracement of the last rally.