Crude Oil Price Update – Looking for Short-Term Pullback into $57.03 to $56.55

January West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening. The market is being pressured by a possible restart of the Keystone pipeline that was shut down late last week and concern that Russia may not participate in a possible extension of the OPEC-led production cuts.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $59.05 will signal a resumption of the uptrend.

The short-term range is $55.00 to $59.05. Its retracement zone at $57.03 to $56.55 is the primary downside target. Since the main trend is up, we could see a technical bounce following the first test of this area.

The main range is $51.09 to $59.05. Its retracement zone comes in at $55.07 to $54.13.

Daily Technical Forecast

Based on the current price at $57.61 and the earlier price action, the direction of the crude oil market the rest of the session is likely to be determined by trader reaction to the long-term uptrending Gann angle at $57.59.

Holding above $57.59 will signal the presence of buyers. This could lead to a quick test of a downtrending angle at $58.05. Overcoming this angle could generate the upside momentum needed to test downtrending angles at $58.55 and $58.80. The latter is the last potential resistance angle before the $59.05 main top.

A sustained move under $57.59 will indicate the presence of sellers. The next target is the uptrending angle at $57.25, followed by the retracement zone at $57.03 to $56.55.

The restarting of the Keystone pipeline means traders who bought late last week on this news are going take profits. This should drive the market back to last week’s breakout level which is $56.93. This price falls inside the short-term retracement zone. Based on this assessment, we’re fairly confident crude oil prices will retreat into at least $57.03 to $56.55 over the short-run.